The True Costs of Selling a Commercial Property

Selling a commercial property in Los Angeles comes with a number of costs you need to account for before you can calculate your net proceeds. Here's a comprehensive breakdown.

Broker Commission

Commercial real estate commissions in LA County typically range from 4–6% of the sale price, split between the listing broker and buyer's broker. For a $3 million building, expect to pay $120,000–$180,000 in total commission.

Transfer Tax

Los Angeles County charges a Documentary Transfer Tax of $1.10 per $1,000 of value. The City of Los Angeles adds its own transfer tax, and Measure ULA (the "Mansion Tax") applies an additional 4% surcharge on sales above $5 million and 5.5% above $10 million.

Escrow and Title Fees

Escrow fees typically run 0.1–0.3% of the sale price. Title insurance is usually paid by the seller in Southern California and can range from $1,500 to $10,000+ depending on the purchase price.

Capital Gains Taxes

Federal long-term capital gains rates are 0%, 15%, or 20% depending on your income bracket. California adds its own capital gains tax at your ordinary income rate (up to 13.3%). Depreciation recapture is taxed at 25% federally. Total tax exposure can easily exceed 35–40% without proper planning.

How to Reduce Your Tax Burden

The most powerful tool is a 1031 exchange, which lets you defer capital gains taxes by reinvesting in a like-kind replacement property. Samimi CRE Advisors specializes in helping sellers execute 1031 exchanges. Contact us for a free consultation.