Los Angeles has a new mansion tax since April 1 and here are some of the consequences:

Measure ULA adds a transfer tax of 4 percent for sales above $5 million and 5.5 percent for deals above $10 million; real estate transactions in the city below those levels pay the already-established transfer tax rate of .56 percent.

“The flurry of activity that happened up until April 1 was pretty phenomenal,” says real estate attorney Loretta Thompson, a partner at Withers Worldwide. “And then, of course, after that, people started pulling their listings. There’s been a quantifiable pause in anything that’s over $5 million. It chilled the market immediately, which was what everyone expected it would do.”…

There are some winners. Independent Los Angeles County cities like Beverly Hills and Malibu have become more desirable since the measure does not apply to them. It is also shifting the balance of power in luxury real estate, long a seller’s market. “Buyers are being picky right now,” says Nourmand, adding that some people are willing to wait in hopes that sellers bring down prices on mansions: “They feel they have the upper hand in the high-end market. They don’t feel like they have to rush — they think time is on their side.” James Corden, for instance, listed a Brentwood house in January for $22 million, then dropped it to $18 million before selling it in July for $17.1 million. According to Dirt.com, Corden’s sale is subject to nearly $1 million in taxes under the ULA Measure.

However, many hope the tax will be revamped or rescinded. With two lawsuits already challenging the measure, the City of Los Angeles finance director has been instructed to hold any monies received, rather than use them as planned to create affordable housing options in the city.

Will any of these consequences affect legal rulings? Whether this is allowable is a different kind of question compared to how it is working out in practice.

Will the new revenue effectively address affordable housing? At the moment, the revenue is tied up. But, put together taxes from several of these sales and some new housing units could emerge.

It will be interesting to see where the turning point in the market is. Wealthier homeowners will still want to buy and sell property. There will likely still be demand from those outside the region who want to move into these homes.