Two proposed tax increases are likely to appear on the City of Los Angeles March 2013 ballot — and they would impact anyone who buys a house or parks a car in the city.
One proposal would increase the city’s documentary transfer tax, which homeowners pay when they sell a residence in Los Angeles. The current tax is $4.50 per $1,000 of the sales price, which pencils out to about $1,643 on average for each seller.
A proposal from City Administrative Officer Miguel Santana would create a progressive scale of tax rates. For homes that sell for $255,000 or less, the tax would drop to $2.25 per $1,000. Properties in the median range of $255,000 to $365,000 would not see a change in the tax rate. More expensive homes would see an increase — $6.75 per $1,000 for properties between $365,000 and $585,000, and $9 per $1,000 for houses that sell for more than $585,000.
The tiered tax system could bring in an additional $76 million to $82 million for the city’s General Fund, which goes toward police, fire and street repairs, among other services. The CAO projects the number of home sales could drop by one percent as a result of the tiered tax structure. With an increase in the flat tax, home sales would likely drop 3.8 percent, according to the CAO’s report.
The CAO is also recommending that the city’s parking occupancy tax increase from 10 percent to 15 percent. The tax is included in parking lot and garage fees. The increase would generate an additional $41 million to $43 million a year for the city.
Both proposals are intended to close the city’s deficit, which is projected to be $216 million in fiscal year 2013-14.
The Los Angeles City Council will decide by Nov. 6 whether to place the proposed measures on the March 5, 2013 ballot. Each proposal would require a majority vote of the electorate.