Los Angeles mansion for sale faces April 1 tax deadline
The owner of this stunning seven-bedroom, 11-bath Los Angeles mansion is willing to accept $6 million less than he paid for it less than two years ago, all in order to get it done.
The house has a Kobe Bryant-themed basketball court, a car dealership, and a 70-foot infinity pool that appears to float about 45 feet above the mountainside. The home is being sold at a discounted price of $38 million.
If it’s not sold by April 1, the property will be subject to a new local mansion tax, effective next month, that could cost the owner another $2 million.
The magnificent living room opens onto the street with 22-foot-high ceilings, a 10-foot-long fireplace, and a giant wall covered in living green moss that stretches across three levels of the home.
Brentwood Manor, now known as star resort, was built by experienced spec designer Ramtin Ray Nosrati, who sold it back in 2021 for $44 million. The nearly 16,700-square-foot residence was purchased by the trust fund of wealthy investor Jeffrey Feinberg, who manages Feinberg Investments, according to public records.
About a year after the purchase, Feinberg put the house up for sale again for $48 million, but was unable to find buyers. Feinberg invited David Malka from Icon Advisors to implement a more aggressive pricing strategy, and the original asking price was reduced by $10 million, or nearly 21%. To put this price drop into perspective, that means the value of the home has dropped nearly $64,000 every week for the 94 straight weeks since Feinberg bought it.
One wall of the dining room is a 1,000 gallon salt water aquarium overlooking the kitchen on the other side.
Malka told CNBC that Star Resort’s annual property taxes cost his client about $550,000 a year, plus about $20,000 a month in utilities.
“Plus staff and so on, so probably a million dollar expense [per year]Malka said.
On the lowest level of the house is a semi-basketball court in the style of Kobe-Bryant.
Trying to get rid of an expensive mansion in the midst of a banking crisis, when the Los Angeles real estate market is weakening and uncertainty is mounting, is not exactly a good time.
Feinberg, like all luxury mansion sellers in Los Angeles, is also fighting a new mansion tax approved by voters in November. The ULA tax, as it’s called, was designed to “fund affordable housing projects and provide resources to tenants at risk of homelessness,” according to the City of Los Angeles website.
It is levied on the seller as a transfer tax on the sale of a home or any property that sells for $5 million or more.
The home’s impressive foyer includes double height ceilings and glass walls that open onto the pool deck and outdoor bar.
For homes valued between $5 million and $10 million, sellers will have to pay the city 4% of the total sale price. For real estate transactions exceeding $10 million, the rate increases to 5.5%.
The new tax is in addition to the current City Property Transfer Tax of 0.45%. And it’s charged based on the selling price, not profit, meaning sellers will have to pay even if they’ve already incurred a loss, as may be the case with Star Resort.
The city website has a tax calculator, which estimates ULA and city transfer taxes on the $38 million deal at $2,261,000, or just under 6% of the total deal.
The master bedroom is punctuated by a recessed, wood paneled ceiling and glass walls that slide open to access a private terrace.
Many luxury home sellers and their agents are looking to lock in profits and complete the sale before the new tax goes into effect. But Malka, who wouldn’t discuss his client’s name with CNBC, is under pressure to get a better price and curb his client’s losses before the new tax increases them even further.
“That’s why we decided to give a nice price cut and send a signal to the market that my seller is motivated to sell and wants to move on,” said Malka, who is still hopeful he can broker a deal before the first trade. month.
Bar, pool table and wine cellar for 250 bottles on the lower floor of the house.
“It’s crazy,” said real estate broker Aaron Kirman of AKG/Christies International. “People had a four-month window from the day [the new tax] went to sell the house.
Kirman, one of Los Angeles’ top luxury real estate agents, doesn’t represent Star Resort, but he has many clients who are also in a rush to sell properties.
It’s a trend that’s mirrored by the Los Angeles Multiple Listing Service (MLS), which Kirman says shows 86 homes with a sale price of over $5 million that are currently in escrow, he said.
A glass wall in the lower living room overlooks an elegant car gallery.
“The tax is being introduced at a challenging time with interest rates, inflation and banking problems,” Kirman told CNBC. “It couldn’t have been a more perfect storm.”
The ULA tax, he said, “led to a sharp decline in the prices of many homes.”
Kirman said potential homebuyers are swooping in with cash offers and the promise of a quick close but at deep discounts.
The main bar of the Star Resort is clad in stone and decorated with illuminated onyx.
The backyard of the Star Resort features an open kitchen and bar, an infinity pool and relaxation areas.
Jonathan Miller, president of real estate appraisal firm Miller Samuel, told CNBC that it would be difficult to predict the impact of the tax on any individual property, but he has a forecast for the entire region: “It will eventually lower attainable prices. compared to the pre-April 1 period and builds into market expectations going forward.”
In other words, the new tax will create downward pressure on homes worth more than $5 million as owners anticipate the future value of higher tax bills.
One of the seven bedrooms of the residence with bathrooms and a private terrace.
CNBC asked Miller to look at market data to see how much luxury single-family home sellers in Los Angeles would pay in 2022 if the mansion tax was already in place. Last year, sales of over $5 million totaled almost $2.5 billion.
By his calculations, all these sellers combined had to pay tax on the mansions for nearly $131 million. Miller estimates that sellers of homes trading between $5 million and $10 million would receive an average tax bill of $43,000, and sellers of homes $10 million or more would have to pay an average tax bill of $1.2 million. dollars.
It is important to note that Miller’s analysis focuses solely on sales of single-family homes above the threshold price. According to city forecastswhich include commercial and multi-family sales, the new tax could generate between $600 million and $1.1 billion a year.
Night view from the jacuzzi by the pools.
The rush to sell before the April 1 deadline is in line with a similar frenzy in New York four years ago, Miller said.
“When New York City introduced a tax on mansions in 2019, there was a spike in closings shortly before the sales start date of July 1, and sales stalled in the following months,” he said.
Rolls-Royce style home theater with a starry ceiling.
The master bedroom terrace has a fireplace and views of the pool below.
Kirman said that even under tax pressure, one thing will remain the same: “A house is worth what the buyer is willing to pay for it.”
And if this amount exceeds $5 million, it will have to pay new taxes.
You can play virtual golf, ice hockey and football in the Star Resort’s sports simulator room.