Picture two burned lots on the same Palisades street, the same size, each selling for $6.6 million. One is sold by the family that owned it the morning the fire started. The other is sold by a buyer who bought it in 2025. If voters approve Proposition TE on November 3, the first sale would owe about $29,700 in city transfer tax and the second about $293,700. The land is identical. The only difference is who signs the deed.
The difference comes from one line in the ordinance. Proposition TE would exempt certain Pacific Palisades sales from Measure ULA, but it never attaches the exemption to the parcel. It attaches it to whoever owned the property on January 7, 2025. Most coverage treats the measure as a yes-or-no tax break for "the Palisades." For anyone pricing, buying or selling burned property between now and 2030, it works more like a two-tier market.
The test is ownership on one date
The official ballot title is "Property Transfer Tax Exemption for Victims of January 2025 Fire Disaster." The proposed ordinance text filed with the City Clerk lists the conditions a sale must meet:
- The property is residential and was damaged or destroyed by the Palisades Fire in January 2025.
- The Department of Building and Safety has verified the damage or destruction.
- The seller is the current owner.
- The seller was also an owner on January 7, 2025.
- The property has not already used this exemption.
- The property isn't already exempt from ULA on other grounds.
The list leaves some things out. The text has no primary-residence or owner-occupancy condition. It also doesn't require a house to be standing. The City's own fiscal estimate counted both rebuilt homes listed for sale and vacant-parcel sales after the fire. A second home, a lot left empty since the cleanup, and a house rebuilt by its original owner could all qualify, provided the owner on January 7 is the one selling.
Conditions four and five do the most work. A buyer who purchases after the fire wasn't an owner on January 7, so they can't be the qualifying seller later. A property that has already used the exemption can't use it again. In practice, the exemption is available once, to the original owners, and it doesn't pass to the next buyer.
What the tax is worth on a real Palisades price
For transactions closing after June 30, 2026, the Los Angeles Office of Finance sets the ULA thresholds at $5.4 million and $10.9 million. Above $5.4 million and below $10.9 million, ULA adds 4%. At $10.9 million or more, it adds 5.5%. The city's base transfer tax of 0.45% applies to every sale either way. ULA is calculated on gross value, which includes any liens or loans that stay on the property. Once a price crosses the line, the rate applies to the whole price, not just the amount above the threshold.
Recent burned-lot trades give a sense of where Palisades prices sit relative to that line. The Real Deal reported a sale of more than $7 million at 14948 Camarosa Drive in March 2026, $6.6 million at 906 Glenhaven Drive in February 2026, and $5.9 million at 15300 Antioch Street in July 2026. Those sales closed under earlier conditions, but they show that ordinary lots, not just estates, have been trading above the threshold. Here is how city transfer tax works at those prices under the thresholds in effect since July 1, 2026:
| Sale price | Base tax at 0.45% | ULA at 4% | Total if ULA applies | Total if Prop TE applies |
|---|---|---|---|---|
| $5,400,000 | $24,300 | $0 | $24,300 | $24,300 |
| $5,900,000 | $26,550 | $236,000 | $262,550 | $26,550 |
| $6,600,000 | $29,700 | $264,000 | $293,700 | $29,700 |
| $7,000,000 | $31,500 | $280,000 | $311,500 | $31,500 |
The last two columns show what the January 7 ownership test is worth. At $6.6 million, the difference between an eligible seller and an ineligible one is $264,000.
How that splits the lot market
That gap matters because the people holding Palisades lots are no longer only the original owners. The Real Deal reported that as of June 2026, more than 1,000 vacant lots across Altadena and Pacific Palisades had changed hands, and investors made up about half of the buyers. Every one of those parcels has already lost its eligibility. If Proposition TE passes, the Palisades would have one supply of lots sold by original owners that could close without ULA through January 6, 2030, and another supply sold by post-fire buyers that carries the full tax.
For a buyer, that changes what a seller can accept. An original owner netting the same proceeds can take a lower price than an investor who has to cover ULA on the sale. For an investor who bought a lot planning to resell it, the measure gives nothing, because the exemption was used up, or never available, when the original owner sold. The same holds for a buyer who acquires a lot to rebuild and later sells the new house: the January 7 test looks at who owned the property that day, and that wasn't them.
This feature of the measure is also what drew the most criticism. Councilmember Eunisses Hernandez cast the only vote against placing it on the ballot. LAist's voter guide reports her argument that the carve-out shouldn't cover LLCs, investors, or owners of multiple properties. The final text limits eligibility by ownership date, not by occupancy, so an owner who held the property on January 7 qualifies whether or not they lived there. No official argument against Proposition TE was filed. The argument in favor in the city voter pamphlet is signed by Councilmember Traci Park, Mayor Karen Bass, Council President Marqueece Harris-Dawson, Councilmember Monica Rodriguez, Councilmember Nick Melvoin, State Senator Ben Allen, Assemblymember Jacqui Irwin, the LA/OC Building & Construction Trades Council, the Western States Regional Council of Carpenters, and Pacific Palisades Community Council president Allison Holdorff Polhill.
The City estimates the measure could reduce ULA revenue by $35 million to $66 million through January 2030. The high end assumes twice as many qualifying transactions. For comparison, The Real Deal reported that ULA had raised nearly $1.3 billion from more than 1,700 transactions citywide as of June 2026.
Original owners who already sold
The ownership test also reaches backward. The exemption would be operative from January 7, 2025, through January 6, 2030, and the ordinance authorizes the Director of Finance to refund eligible ULA tax paid before the measure takes effect. An original owner who sold a damaged property above the threshold in 2025 or earlier this year would fall inside that window.
The refund clock works differently from usual. The Office of Finance handles overpayments through its Claim for Refund Application, Form 96.006(a), which asks for the amount paid, the payment date, an explanation, and the claimant's signature. Its general instructions give one year from payment to file. Proposition TE's text says those time limits don't start running for these refunds until the measure's effective date. Under the ordinance as written, an original owner whose sale closed more than a year ago wouldn't be locked out by the usual deadline. The refund depends on passage, and the ordinance doesn't list what documents the Office of Finance will require for each claim.
The weeks between the vote and a final answer
Election night won't settle this. The county's deadline to certify November 3 results is December 3, 2026. After the county certifies the results for city measures, the City Council declares them. No reporting we found gives a calendar date for that declaration or for when the ordinance becomes operative. The measure needs a simple majority to pass.
That gap lands on a market where lot deals are already fragile. In September 2026, The Real Deal reported that some agents put the share of Palisades lot deals falling apart in escrow as high as 40%. The reasons cited were buyer nerves and disagreements over price, and buyers were working through questions about financing, how a site was cleaned, and new rebuilding rules. Because of the refund provision, an eligible original owner who closes before the effective date wouldn't necessarily lose the exemption. Even so, eligibility is now one more thing a price negotiation has to account for.
What is still unsettled
Three practical questions remain open in the public record:
- Verification. The ordinance requires the Department of Building and Safety to verify the damage, but we found no published procedure explaining how it will do that. The red and yellow tags described in county recovery guidance relate to safety and re-entry, not tax eligibility.
- Jurisdiction. The exemption covers property sold within the City of Los Angeles. LAFD's after-action report describes the fire reaching Topanga and Malibu as well, and any fire-affected parcel outside city limits would fall outside a city measure.
- Statewide changes. ULA itself is stable for now. A Court of Appeal panel upheld it in December 2025. A Howard Jarvis-backed statewide initiative to cap local transfer taxes was withdrawn in June 2026. Proposition 43 on the statewide ballot would change vote thresholds for certain future local taxes starting January 1, 2027, not the current ULA rates.
A few questions sellers and buyers raise
Does a lot with no house on it qualify? The ordinance covers residential property damaged or destroyed by the fire, and the City's fiscal estimate expressly included post-fire vacant-parcel sales.
If an original owner rebuilds and then sells, does the exemption still apply? The text looks at whether the seller owned the property on January 7, 2025, and whether the property has used the exemption before. It doesn't distinguish rebuilt homes from lots. The City's estimate counted rebuilt homes listed for sale. The sale would still have to fall inside the operative window ending January 6, 2030.
Does the exemption remove all transfer tax? No. It applies to the ULA portion only. The 0.45% base city transfer tax still applies.
Can a buyer inherit the seller's eligibility? Under the text, no. Whoever buys after the fire wasn't an owner on January 7, 2025, and a property that has used the exemption can't use it again.
Whether a particular Palisades property qualifies comes down to three questions: who was on title on January 7, 2025, what the Department of Building and Safety will accept as verification, and where the price falls against $5.4 million. If you're weighing a sale, a purchase, or a refund around Proposition TE, Blanche D'Souza can help you lay out the timing and bring in the right tax and legal advisors for your situation. Let's Connect.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.