A Los Angeles County judge dismissed a lawsuit challenging the city of L.A.’s so-called “mansion tax” on Tuesday, signaling the end of a legal battle from the luxury real estate community which sought to prove the measure was unconstitutional.
Los Angeles County Superior Court Judge Barbara Scheper issued a tentative ruling that dismissed the challenge on Monday after hearing arguments from both parties. The lawsuit was officially dismissed on Tuesday, the Los Angeles Times reported.
The legal battle, which was spearheaded by Newcastle Courtyards and Howard Jarvis Taxpayers Assn., drew national attention as other cities looked to see how the city would handle the issue.
Advocates of the measure told the Times that L.A. “desperately needs the money raised by the tax” and were happy with the judge’s decision.
On the other hand, an attorney for Newcastle told the publication he plans to appeal the decision.
The tax, known as Measure ULA, was passed in November and took effect on April 1. The measure imposed a 4% transfer tax on residential and commercial real estate sales over $5 million and a 5.5% tax on properties over $10 million.
If a mansion is sold while the measure is active, the seller must pay the tax cost.
The measure also established the ULA Tax, which will be used to fund “affordable housing projects and provide resources to tenants at risk of homelessness,” according to the Los Angeles Office of Finance website.