The owner of this over-the-top, seven-bedroom and 11-bath mansion in Los Angeles is prepared to accept $6 million less than what he paid for it less than two years ago — all to beat a ticking clock.
The home features a Kobe Bryant-themed basketball court, car showroom and a 70-foot infinity pool that appears to float some 45 feet above the mountainside, and it’s on sale for a reduced price of $38 million.
If it doesn’t sell by April 1, the property would be subject to a looming new, local mansion tax, which goes into effect next month and could cost the owner a further $2 million.
The grand living area opens to the outdoors with 22 foot ceilings, a 10-ft long fireplace, and a giant wall covered in living green moss that extends across three levels of the home.
The Brentwood estate, now known as the Star Resort, was built by veteran spec developer Ramtin Ray Nosrati, who sold it back in 2021 for $44 million. According to public records, the almost 16,700-square-foot residence was purchased by the trust of wealthy investor Jeffrey Feinberg, who runs Feinberg Investments.
About a year after buying it, Feinberg put the home back on the market for $48 million but couldn’t find any takers. Feinberg brought in Dan Malka of Ikon Advisors to implement a more aggressive pricing strategy, and the original asking price was chopped down $10 million, or almost 21%. To put that price cut into perspective, it amounts to the home dropping almost $64,000 in value every single week for 94 weeks straight since Feinberg bought it.
One wall of the dining room is a 1,000 gallon salt water aquarium with views into the kitchen on the other side.
Malka told CNBC yearly real estate taxes on the Star Resort run his client around $550,000 a year, plus about $20,000 a month in utilities.
“Plus, the staff and so on, so probably a million dollars of expenses [per year],” Malka said.
Jutting out from the lowest level of the home is a Kobe-Bryant-themed half basketball court.
Trying to unload an expensive mansion in the midst of a banking crisis with the LA real estate market softening and uncertainty looming large isn’t exactly great timing.
Feinberg, like all luxury mansion sellers in LA, is also contending with the 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’s levied on the seller as a transfer tax upon the sale of a home, or any real property, that trades for $5 million or more.
The home’s impressive foyer includes double height ceilings and glass walls that open to the pool deck and outdoor bar.
For homes priced between $5 million and $10 million, sellers will have to pay the city 4% of the total sale price. For real estate trading north of $10 million, the rate increases to 5.5%.
The new tax is on top of the city’s current 0.45% transfer tax. And it’s levied based on sale price, not profit, which means sellers will have to pay up even if they’re already taking a loss, as could be the case with the Star Resort.
The city’s website includes a tax calculator, which estimates ULA and city transfer taxes owed on a $38 million deal at $2,261,000, or just under 6% of the total deal.
The primary bedroom is accented by a recessed wood-panel covered ceiling and walls of glass that slide away for access to a private terrace.
For many high-end home sellers and their agents, the race is on to lock in profits and close on a sale before the new tax takes effect. But for Malka, who wouldn’t discuss his client by name with CNBC, the pressure is on to get the best price and rein in his client’s losses before the new tax takes them even higher.
“That’s why we decided to give a good price cut and send a signal to the market that my seller is motivated to sell and that he wants to move on,” said Malka, who still holds out hope he can broker a deal before the first of the month.
A bar, billiards table and 250-bottle wine cellar on the home’s lowest level.
“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] passed to sell a house.”
Kirman, who is one of LA’s top-producing luxury real estate brokers, does not represent the Star Resort, but he does have many clients who are also in a big rush to sell.
It’s a trend, he said, that’s reflected in LA’s Multiple Listing Service (MLS), which according to Kirman shows 86 homes with sale prices over $5 million currently in escrow.
A glass wall in the lower lounge offers a view into a sleek car gallery.
“The tax is coming out at a complicated time with interest rates, inflation and bank issues,” Kirman told CNBC. “It couldn’t have been more of a perfect storm.”
The ULA tax, he said, “has led to dramatic price reductions on many homes.”
Potential homebuyers are swooping in with all-cash offers, and the promise of a fast-closing deal, Kirman said, but at deep discounts.
The Star Resort’s main bar is clad in stone and accented with back lit onyx.
The Star Resort’s backyard includes a an outdoor kitchen & bar, infinity pool and lounge areas.
Jonathan Miller, president of the real estate appraisal firm Miller Samuel, told CNBC it will be hard to project the impact of the tax on any one piece of real estate, but he does have a prediction across the region: “It ultimately lowers achievable prices as compared to the period before April 1 and becomes baked into market expectations in the future.”
In other words, the new tax will create a downward pressure on homes over $5 million as owners anticipate the future cost of higher tax bills.
One of the residence’s seven ensuite bedrooms with a private terrace.
CNBC asked Miller to crunch market data to see how much sellers of luxury single-family homes in LA would have paid in 2022 if the mansion tax were already in effect. Last year, sales of $5 million-plus totaled almost $2.5 billion.
According to his calculations, all of those sellers combined would have racked up a mansion tax bill of almost $131 million. Sellers of homes trading between $5 million and $10 million would have seen an average tax bill of $43,000, according to Miller’s estimates, and sellers of $10 million-and-up homes would have footed an average bill of $1.2 million.
It’s important to note Miller’s analysis focused exclusively on single-family home sales over the price threshold. According to the city’s projections, which include commercial and multifamily sales, the new tax could generate between $600 million and $1.1 billion annually.
The night view from the pools hot tub.
According to Miller, the rush to sell before the April 1 deadline matches a similar frenzy in New York four years ago.
“When New York implemented the mansion tax in 2019, there was a surge in closings just short of the July 1 start date and a void of sales in the following months,” he said.
Home cinema with Rolls-Royce inspired star lit ceiling.
The primary bedroom’s terrace includes a fire feature and views of the pool below.
Kirman said even with the tax pressures, one thing will remain the same: “The house is worth what the buyer is willing to pay for it.”
And if that amount is over $5 million, there will be some new taxes to pay on it.
The Star Resort’s sport simulation room offers virtual golf, hockey and soccer.
Correction: This story has been updated to correct the name of Dan Malka of Ikon Advisors.
(With inputs from CNBC)