Los Angeles City Transfer Taxes

Los Angeles levies relatively steep transfer taxes on property. While some argue that steep tax rates act as disincentives to investment, others maintain that the city needs this tax money to continue to provide services and support programs. Of course, if you're in the business of transferring properties in Los Angeles, you likely don't want to pay more than your minimum obligation.

One savvy, legal alternative to chip away at transfer properties fees is the IRS 1031 exchange program. This code allows private investors to transfer properties without paying capital gains taxes by sheltering investment money with a Qualified Intermediary. Basically, the 1031 code allows you to trade property for property, as long as both properties are considered "like kind."

Understanding Your Transfer Tax Options

Of course, the rules governing these 1031 transfer exchanges can be quite confusing. Your Qualified Intermediary may be able to help you navigate the logistics of the 1031 exchange--including the strict time deadlines for identifying and closing on the transfer property. At the same time, you may also have to juggle the logistics of Los Angeles property taxes.

Even if you get your transfer tax rates down, you may still have to pay a substantial amount thanks to something called the Alternative Minimum Tax. The AMT was originally designed to close tax loopholes on wealthy investors and individuals. However, thanks to recent changes in the national tax laws, even middle-class Americans are now being called into account by the AMT.