![\"\"](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/07\/gesh-group-proj.jpg\")
Gesh Group projects<\/p>\nAs the impacts of Measure ULA continue to impact Los Angeles real estate, new strategies to avoid the property transfer tax are emerging \u2014 including luxury homeowners choosing extensive remodels over selling. While this can mean more business for contractors, brokers are feeling clients\u2019 hesitancy to ink deals.<\/p>\n
Oren Levy \u2014 founder of Gesh Group, a luxury homebuilder that also remodels existing single-family assets \u2014 has seen this play out.\u00a0<\/p>\n
Gesh Group projects<\/p>\n
Prior to Measure ULA<\/a> going into effect, Levy said his firm\u2019s projects were about 80 percent new development and 20 percent remodels. Now, that\u2019s changed to about 60 percent remodeling and 40 percent new builds. And the renovations have become larger in scale, often involving stripping the home down to the studs.<\/p>\n \u201cWe are seeing an uptick in people reaching out to us wanting to remodel or build new construction on their existing lot,\u201d Levy said. \u201cIn some instances, there\u2019s homeowners that are leaving one wall and remodeling everything else\u2026 and for all intents and purposes, it looks and feels like a brand new home.\u201d<\/p>\n Measure ULA, approved by voters in 2022, places a 4 percent tax on all real estate sales in the City of Los Angeles between $5.4 million and $10.9 million and 5.5 percent for properties that sell for more.<\/p>\n The renovation play has inherent implications for residential brokers, too. The Agency\u2019s Emil Hartoonian, who focuses on Sherman Oaks and Studio City (which fall under ULA) as well as Calabasas, said \u201cMeasure ULA has absolutely created hesitation among homeowners considering a sale.\u201d<\/p>\n \u201cIt has become part of nearly every meaningful conversation we have about timing, pricing, renovation and whether a sale makes financial sense,\u201d Hartoonian said.<\/p>\n The lack of alignment on pricing between buyers and sellers caused by ULA is another factor for homeowners dragging their feet when selling above the ULA threshold. While sellers want to factor in the hit they\u2019ll take from the transfer tax when determining price, \u201cbuyers generally do not assign additional value to a property simply because the seller has a substantial ULA obligation,\u201d Hartoonian said.<\/p>\n At the same time, extensive renovations can be pricey.<\/p>\n For Gesh Group\u2019s high-end remodels, the cost is typically between $1 million and $6 million for homes that would sell for above the Measure ULA threshold. Many of these remodels are in Sherman Oaks, Encino, Bel Air<\/a> and Brentwood, Levy said, which all tied to ULA<\/a>.\u00a0<\/p>\n He pointed to one project in Brentwood where the homeowners originally wanted to sell but after factoring in the costs of the tax, plus commission for agents \u2014 which, combined, would have eaten about 11 percent of the sale proceeds \u2014 they decided to pivot.<\/p>\n \u201cInstead of giving that [money] away, they reinvested into their current home,\u201d Levy said.\u00a0<\/p>\n Still, Hartoonian warns that remodels carry risks of their own.\u00a0<\/p>\n \u201cRenovation is not necessarily the safer or more economical decision\u2026 and there is never a guarantee that the market will fully return the investment,\u201d Hartoonian said, also pointing to the disruption to the homeowner\u2019s daily life as a deterrent.<\/p>\n Even so, some homeowners are choosing the remodel route once factoring in higher mortgage rates, along with costs from ULA and commissions.<\/p>\n This trend stretches beyond what Levy and Hartoonian are seeing day to day, backed by research from Attom Data Solutions.<\/p>\n In comparing the volume of permits for single-family home remodels in the City of Los Angeles during 2018 and 2019 \u2014 to serve as a baseline for pre-ULA and also before the pandemic \u2014 to the two years following the transfer tax taking effect, Attom<\/a> found a 46 percent increase for high-priced homes. Meanwhile, there was no statistically significant change for mid-priced homes.<\/p>\n \u201cThe mansion tax appears to have reshaped the strategies of luxury homeowners, incentivizing them to retain and upgrade existing properties rather than sell,\u201d Yingru Pan, a PhD candidate at UCLA who sourced Attom\u2019s data for a study, said in a report. \u201cFacing potential tax liabilities on high-value sales, many opt to \u2018sit\u2019 on their homes while investing in renovations.\u201d<\/p>\n While this trend developed across the single-family landscape, multifamily owners are taking caution when it comes to renovations, Trent Klatte, CEO of West End Construction, said. The firm does renovations on single-family and multifamily properties, along with ADU construction and wildfire rebuilds.\u00a0<\/p>\n As building ADUs on small- to mid-sized multifamily assets has been a growing value-add strategy for investors, Klatte said those with properties within the City of Los Angeles are factoring in the ULA tax when deciding how much to scale their buildings.<\/p>\n Looking at a multifamily building with 16 units as an example, Klatte said that even though an owner could add eight ADUs to their property per state law, they might opt for fewer to avoid raising their property\u2019s value above the ULA threshold.\u00a0<\/p>\n \u201cIf selling is in [the owner\u2019s] plans, it\u2019s actually a detriment to them to add more density and get above that $5 million value,\u201d Klatte said.\u00a0<\/p>\n \tRead more \t\t\t\t\t\t\t\t\t\t\t\t\t Sorting out Measure ULA proposals as City Council balks on ballot measure<\/p>\n \t\t\t<\/a> \t\t\t\t\t\t\t\t\t\t\t\t\t Relief from LA\u2019s mansion tax still appears a pipe dream<\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/07\/gesh-proj-2.jpg\")
<\/p>\n
\n\t\t\t\t\t\t\t\t<\/p>\n![\"From](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/07\/1784709084_964_LA-City-Council-ditches-mansion-tax-ballot-measure-200x133.jpg\")
\t\t\t\t\t\t\t\t\t\t\t<\/p>\n
\n\t\t\t\t\t\t<\/p>\n![\"Los](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/07\/Relief-from-LAs-mansion-tax-still-appears-a-pipe-dream-200x133.jpg\")
\t\t\t\t\t\t\t\t\t\t\t<\/p>\n
![\"Governor](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/07\/LA-Game-of-Thrones-twist-Last-minute-deal-spikes-ballot-measure-to-kill-LA-mansion-tax-MAIN-r1-200x1.jpeg\")
\t\t\t\t\t\t\t\t\t\t\t<\/p>\n