In the Hollywood Hills, a home that sells for $5,400,000 owes the City of Los Angeles about $24,300 in transfer tax. Add one dollar to the price and the city tax comes to about $240,300. The cause is Measure ULA. For transactions closing after June 30, 2026, the city adds a 4% tax on conveyances over $5.4 million and under $10.9 million, on top of its 0.45% base tax. That 4% applies to the whole price, not just the amount over the line.
That one dollar adds about $216,000 in tax. The jump creates a band of prices just above the threshold where every extra dollar the buyer pays is worth less to the deal than closing at the line itself. For anyone pricing, bidding on or comparing a home in the $5 million range in the hills, this band changes how the market behaves.
The Arithmetic of the Notch
The city's published schedule has three tiers. The combined rate is 0.45% up to $5.4 million, 4.45% above $5.4 million and under $10.9 million, and 5.95% at $10.9 million or more. Running a few prices through that schedule shows where the band ends. The figures below show only city transfer tax. They leave out commissions and every other closing cost, and they don't assume which party carries the tax.
| Sale price | City transfer tax | Price minus city transfer tax |
|---|---|---|
| $5,385,000 | about $24,233 | about $5,360,767 |
| $5,400,000 | about $24,300 | about $5,375,700 |
| $5,500,000 | about $244,750 | about $5,255,250 |
| $5,626,000 | about $250,357 | about $5,375,643 |
| $6,000,000 | about $267,000 | about $5,733,000 |
A $5.5 million sale nets roughly $120,000 less than a $5.4 million sale after city tax. A price has to get to about $5.63 million before the deal does as well as it would have at exactly $5.4 million. Between those two numbers, the higher price is the worse result on paper.
Torreyson Drive, $15,000 Under the Line
Chris Evans's house at 7840 Torreyson, high above Mulholland Drive, shows what this looks like in a real sale. Robb Report reported that it was first offered in May 2025 at nearly $7 million and relisted at $6.4 million. It closed at the end of August 2026 for $5.385 million. That is $15,000 under the threshold that took effect for closings after June 30. The coverage doesn't say the tax shaped the final price, and nothing here assumes it did. Still, the closing price sits in the narrow range just below the line, where the notch analysis predicts prices would gather.
The date matters too. Before July 1, 2026, the line was $5.3 million. The Real Deal noted in June that sales of $5.3 million or more triggered the 4% tax and $10.6 million triggered 5.5%. The thresholds were set to rise to $5.4 million and $10.9 million after June 30. Under the earlier threshold, a $5.385 million closing would have owed the 4% tax, roughly $215,400 more in city tax. The city adjusts its thresholds every year using the Bureau of Labor Statistics Chained Consumer Price Index. As a result, the line moves each summer, and a closing date on one side of July 1 can carry a different tax bill than the same price on the other side.
The opposite outcome came in June on Mount Olympus. The Real Deal reported that Jeremy Piven sold his Hercules Drive home for nearly $6.9 million. The 4% ULA levy on that sale came to $274,000, and the outlet put his profit at roughly $500,000. At that price, the sale was far enough past the band that the higher number still won. The levy just took a large share of the gain.
What the Clustering Looks Like Citywide
No study yet measures this at the level of the Hollywood Hills alone. The evidence is citywide, and it points the same way as the arithmetic. A July 2026 report from Pepperdine and Beacon Economics found that the share of transactions above the thresholds fell after ULA took effect. It also found "visible clustering" just below the thresholds. In its preferred single-family models, post-ULA sale prices in Los Angeles trailed surrounding jurisdictions by roughly 6% to 7% overall. In the $5 million-and-above segment, the gap was roughly 11% to 12%. The same report estimated that monthly high-value transaction counts fell about 41% relative to surrounding jurisdictions, with no statistically significant effect below the threshold.
These numbers come with limits. The authors say their data can't separate sales that were repriced below the line from sales that were delayed, moved to another jurisdiction or never happened. The report discloses support from the Greater Los Angeles Association of Realtors and the Rupe Foundation, and the authors state that they set the design and conclusions independently. Earlier academic estimates of ULA's effects have also drawn methodological criticism. The causal size is still contested. That clustering below the line exists is the less disputed point.
The notch also affects what gets built. A February 2026 UCLA Anderson summary of research on the tax reported that developers kept new single-family projects below the cutoffs or moved them outside Los Angeles. It also reported that city luxury-home construction permits fell 15% to 19%. In a hillside market where much of the high-end supply is new or rebuilt contemporary homes, a builder's choice of finished price is made with the threshold already in view.
Sunset Boulevard Is the Second Line
The Hollywood Hills sit in the City of Los Angeles, and ULA applies only to conveyances inside the city limits. A Los Angeles City Planning Commission record places the Bird Streets and Laurel Canyon in Council District 4. It names West Hollywood as their southern boundary and gives Rising Glen Road and Sunset Plaza Drive as the Bird Streets' eastern edge. West Hollywood says the Sunset Strip lies within its city limits, running along Sunset Boulevard from the Beverly Hills border east to Havenhurst Avenue. West Hollywood also says it has no additional city transfer tax rate. Its rate is $1.10 per $1,000, set by municipal code and Los Angeles County.
In practice, two homes a few minutes apart, both described as near the Strip, can face very different transfer costs at the same price. At $6 million, a sale in West Hollywood carries the county-set rate. A sale up the hill in the Bird Streets carries 4.45% in city transfer tax. Comparable sales drawn from both sides of Sunset without adjusting for this can mislead a buyer or seller about what a price really means. The Pepperdine authors note that some transactions may have shifted to neighboring jurisdictions, but they can't measure how many.
The Same Pattern at $10.9 Million
The second tier works the same way at a higher price. At $10.9 million the rate goes from 4.45% to 5.95% of the full price. That adds about $163,500 in tax at the line. By the same arithmetic, the band where a higher price nets less runs from $10.9 million to roughly $11.07 million. At the top of the hills the tax is large in absolute terms. The Real Deal estimated that Frank Binder's Hollywood Hills listing, offered at $35 million, would carry nearly $1.9 million in Measure ULA fees if it sold at asking.
How the Band Shapes Pricing and Offers
The two notches turn a few ordinary pricing decisions into tax decisions:
- List prices just above a threshold. A list price of $5.5 million aims at a result that nets less after city tax than $5.4 million. Unless the seller expects bids clearly above about $5.63 million, the list price is in the band.
- Offers that land in the band. When a buyer bids $5.45 million and the seller counters higher, both sides are negotiating over money that mostly goes to the city. Closing at the line can leave both parties better off than closing a little above it.
- Timing around July 1. The thresholds reset every year. A contract priced near the line in early summer may face a different tier depending on when it closes.
- Comps across the boundary. Sales south of Sunset in West Hollywood and sales in the City of LA hills need to be compared after transfer tax, not just on price.
- Lower-priced listings. Homes below the line, such as 1754 N. Sunset Plaza Drive, which came to market at $4.4 million on September 29, aren't affected by the notch at all.
None of this is tax or legal advice. How the transfer tax is allocated in a given contract, and whether any exemption applies, are questions for a tax professional or attorney.
Frequently Asked Questions
Is Measure ULA still being challenged? A California Court of Appeal rejected the Howard Jarvis Taxpayers Association's constitutional challenge in December 2025. At the time, the group said it was considering a petition to the California Supreme Court. In June 2026, the association's statewide measure that threatened the tax was withdrawn under a legislative compromise.
Does anything on the November 3, 2026 ballot change ULA in the Hollywood Hills? Statewide Proposition 43 would raise the approval threshold for certain future local special taxes, and the compromise behind it doesn't apply that rule retroactively to ULA. The city's Proposition TE would create a five-year ULA exemption only for residential properties in Pacific Palisades that were damaged or destroyed by the fire. In July, the City Council shelved a separate proposed ballot exemption for new apartment buildings.
Will the $5.4 million line stay put? No. The city adjusts the thresholds every year using the Chained Consumer Price Index. The current $5.4 million and $10.9 million figures apply to transactions closing after June 30, 2026.
If you're pricing or bidding on a Hollywood Hills home near either threshold, Jennifer Purdue can help you work through list price, offer strategy and closing timing with the transfer tax figured in from the start. Book an appointment to go over the numbers for your property.
