Billionaire owners of extravagant mansions in Bel Air, Los Angeles, face having to pay more taxes on their property thanks to a new law. Photo: DutcherAerials
Hollywood has long been a Democratic stronghold, with millions pouring into the party coffers from California, and everyone from Brad Pitt to Robert De Niro has supported Joe Biden in 2020.
Still, The Democrat push to raise taxes on the wealthy, led by the Biden White House, has left many show business elites struggling to avoid huge taxes, including Pitt.
The Ocean's Eleven actor sold his $39 million (£31 million) Los Angeles mansion last week just days before the city's new «mansion tax» went into effect. He's one of many wealthy Californians disposing of property in the city, apparently trying to save millions of dollars in taxes.
People just wanted to change their property, says George Ouzunian, director of Los Angeles-based real estate agency Agency . “People were desperate to close their deals.”
Celebrities and other wealthy residents of the city rushed to challenge the introduction on April 1 of a new tax on the sale of real estate worth more than $5 million.
The tax forces those who sell real estate for $5 million to $10 million to pay a tax of 4% of the selling price and 5.5% for homes over $10 million. This would mean that Pitt would have paid more than $2 million in city taxes if his sale had taken place in just a few days.
This tax is added to the existing real estate transfer fee that applies to all real estate transactions.
Residents of the city voted for the so-called tax on mansions in November last year. It was put to a vote by homeless groups and other campaigners who wanted to use the money raised to fund affordable housing.
Brad Pitt supported Biden in the 2020 election, saying the Democrat was «the president for all Americans.» Photo: Stéphane Cardinale — Corbis/Corbis via Getty Images
The citywide law was passed shortly after Democrat Karen Bass was elected mayor of Los Angeles, promising to «build a new Los Angeles.»
The push to get the Hollywood elite to pay more for their city was part of a broader Democrat effort to tax the wealthy. The centerpiece of Joe Biden's latest budget is a proposed 25 percent tax on billionaires. The President has repeatedly urged the richest Americans to pay their «fair share».
In Los Angeles, the rich are rushing to sell their properties rather than pay before the mansion tax deadline.
Pitt owned its 6,700-square-foot property, which is said to have had a skate park, tennis court, and several pools since 1994, but put it on the market earlier in the year.
The actor was part of a cavalcade of Hollywood elites who supported Biden in 2020, saying the Democrat was «a president for everyone.» Americans.» Whatever the case, he doesn't seem to support the president's high tax instincts.
Uzunian, the agent, says, «We've seen a lot of [LA] Lakers players and actors do This». and forced sellers to cut prices in order to close deals.
Uzunyan says: “We originally put the Bel Air house on the market for $47.5 million, then the price dropped to $36 million and then sold for $26 million only to sell the pre-tax property. "
The sales rush was so frenzied that agents told the New York Post that some sellers were offering luxury cars like Bentleys and Aston Martins to sweeten the deals.
Pitt sold his Los Angeles mansion just days before the new tax went into effect Photo: AENOR/The Mega Agency
Uzunyan says: “The fastest deal was made within three days. The property was listed for sale for three days at $14.9 million and was offered all in cash for $11.5 million from the Middle East — they closed March 29.»
Actor Mark Wahlberg was among those who sold his mansion at a heavily discounted price.
Wahlberg listed his 30,500 sq. feet on the market for $87.5 million, and ended up selling it for just $55 million, lowering the price of the property. by more than a third.
Other sellouts include Jim Carrey. After 30 years in his house of 12,700 sq. ft., the actor put his property up for sale in February for $29 million but was unable to find a buyer before the deadline.
Jennifer Lopez and James Corden have also put their Los Angeles homes up for sale in recent months.< /p>
“The tax affects all wealthy people,” said Los Angeles-based luxury real estate agent Bryce Cooper, director of Compass Real Estate. “In this market, people sell at a loss, and even if you do, you have to pay this tax. For some people, this is a disaster."
Agents are also unhappy that the collection is framed as a «billionaire tax.» Agents stress that this affects all homeowners with properties worth more than $5 million—just a fraction of a billion.
Cooper says, “Once it was introduced, people started cutting prices left, right, and center to sell quickly and avoid paying tax. The high interest rates combined with this new tax will be a double whammy for many people and discourage people from moving to Los Angeles.»
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