The new mansion tax policy, introduced in April 2023, sparked significant controversy in the market. According to the Los Angeles Times, this measure raised approximately $215 million in its first year but also caused market problems and received harsh criticism. This policy only applies to properties within the jurisdiction of Los Angeles City, including luxury areas such as Brentwood, Hollywood Hills, and Bel-Air.

Meanwhile, neighboring Beverly Hills, an independent city, is not affected by the mansion tax. Known for its ultra-wealthy residents and the upscale Rodeo Drive shopping district, Beverly Hills has a unique competitive advantage in the luxury market.

According to appraiser Jonathan Miller, in the two years surrounding the implementation of the mansion tax in April 2023, sales of properties over $5 million in Los Angeles and Beverly Hills both declined. However, the decline in Beverly Hills was less significant. Miller noted, "Sales in Los Angeles, affected by the mansion tax, dropped by about 40%, whereas in Beverly Hills, they only declined by 20%." This indicates that Beverly Hills, without the mansion tax, attracted more affluent buyers and developers.

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For luxury home sellers, the Los Angeles mansion tax imposes a 4% tax on property sales over $5 million and a 5.5% tax on sales over $10 million. This means that sellers lose hundreds of thousands or even millions of dollars in revenue after the transaction is completed. This policy not only displeases sellers but also deters many buyers.

Conversely, Beverly Hills' luxury market is steadily growing, boosted by the absence of the mansion tax. New luxury condominium projects like the Mandarin Oriental, Rosewood, and Aman developments are revitalizing the market.

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The Mandarin Oriental Residences is the first new condominium project in Beverly Hills in over a decade. Developed by SHVO, this project includes 54 residences, each with outdoor space. Michelin-starred chef Daniel Boulud will open his first West Coast private rooftop restaurant here. Prices start at $2.97 million for a one-bedroom, $4.72 million for a two-bedroom, $7.12 million for a three-bedroom, and $50 million for the penthouse, all without the mansion tax.

The Rosewood Residences in Beverly Hills is also attracting attention. Developed by Nahla Capital and GPI Companies, this four-story project is the first standalone residential project for the Rosewood brand in the U.S. The residences range from 3,000 to 7,500 square feet, with prices from $10 million to $45 million. Nahla Capital's co-founder and managing principal, Turgut Alemdar, stated, "The exemption from the mansion tax in Beverly Hills is a significant relief for us."

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Additionally, the 17.5-acre One Beverly Hills project will significantly impact the market. This project includes the Aman Beverly Hills hotel and about 200 residences, currently being built next to the Beverly Hilton hotel. Although specific prices and sizes have not been disclosed, there is substantial interest in this project.

Despite these developments, many single-family homes in Beverly Hills remain on the market. For example, a four-bedroom property on Summitridge Drive is listed for $18.99 million, a nine-bedroom mansion on Beverly Park Way for $48.5 million, and a newly built seven-bedroom mansion on Laurel Way for $34.95 million.

These condominium development projects are changing the landscape of Beverly Hills, attracting more high-end buyers and investors. Ernie Carswell of Douglas Elliman Real Estate commented, "An additional $4 million or $5 million in transaction fees is a significant expense." If Beverly Hills were to implement a mansion tax, it would have a disastrous impact on the market. Wealthy buyers would choose other locations without extra tax burdens to maximize their investment returns.