Real Estate Brokers

Pursuant to Subdivision 9, added to LAMC Section 21.49 (c) by Ordinance No. 152,091 – Real Estate Brokers should include their entire gross commissions, including commissions on sales made by those persons acting as real estate salesmen, when computing tax under LAMC Section 21.49.

In those situations where real estate brokers located within the City of Los Angeles sell property located outside the City; 50 percent of commissions earned from such sales will be accepted as prima facie evidence of proper allocation in the absence of a formula approved by the Office of Finance.

Real estate brokers who are located outside the City of Los Angeles are subject to tax under LAMC Section 21.49 if through their physical presence they carry on substantial sales activity within the City.

Illustrations of substantial activities are the following:

•  soliciting or securing listings
•  showing the property
•  making physical inspection of the property
•  calling upon prospective customers
•  placing signs on the property
•  assisting the seller or buyer to obtain financing
•  assisting the seller or buyer by calling on escrow institutions
•  any other activity performed in the City which can result in the earnings of real estate commissions

In the absence of a formula submitted by the taxpayer and approved by the Office of Finance, 50% of the gross sales commissions earned from the sale of real property located within the City by a real estate broker with a physical location outside the City, will be accepted as prima facie evidence of proper allocation of the gross commissions, etc.