Real Estate News
Stakeholders disagree on whether the tax would lessen or worsen Boston’s affordable housing crisis.
The Massachusetts House of Representatives advanced a bill Monday that would create a new tax on big money real estate transactions in the city of Boston, State House News Service (SHNS) reported.
While proponents of the bill say it would help combat the affordable housing crisis in Boston, detractors say there are other, better funding sources, and that the tax is counterproductive because landlords would pass the increased cost onto tenants.
The bill would institute a transaction fee of up to 2% on real estate transactions over $2 million to be paid for by the seller. The money would then be used to create and preserve affordable housing for Boston seniors through Boston’s Neighborhood Housing Trust.
The bill would also reduce Boston seniors’ property taxes through a widened tax exemption under which thousands more seniors would qualify.
Boston Mayor Michelle Wu, who helped get the measure passed by the Boston City Council in March, is a major proponent of the bill. The Mayor’s Office expects the tax to generate nearly $100 million dollars annually, based on figures from 2021.
Had the tax been in effect in 2021, the Mayor’s Office said, only around 700 transactions would have been affected. According to The Boston Herald, that is about 7% of total transactions.
“Boston’s most pressing challenge is our housing crisis, which has been pushing families out of our city and deepened even more with the pandemic,” Wu said in a news release about the tax in March.
“As we see the transformational impact of federal funding for our recovery, it’s clear that Boston needs a reliable funding source to focus on housing affordability and keep families and seniors in their homes.”
But some important stakeholders don’t think Wu’s tax would be a good solution to the housing crisis.
According to the Herald, The Greater Boston Real Estate Board and the Massachusetts Association of Realtors testified in opposition to the tax at the State House in June.
The Herald reported that both organizations cited Boston’s approval process for the construction of new housing, which they say is difficult and tedious, as the problem.
“This is not a funding problem — this is an affordable-housing-production problem,” Dawn Ruffini, of the Realtors organization, reportedly said. “Transfer taxes will harm our communities.”
Gov. Charlie Baker also said in March that he opposes the tax.
“As a general rule, I don’t support these sorts of things,” Baker said previously. “And I especially wonder why we’re doing this at a point in time when we have billions of dollars available to us to spend on housing and the City of Boston has hundreds of millions of dollars available to them to spend on housing.”
This isn’t the first time Boston has tried to pass the bill. Former Boston Mayor Marty Walsh signed a previous version of the bill into law after Boston City Council passed it in 2019, but it never made it through the Legislature.
Boston is also far from the only municipality trying to pass such a law. Concord, Somerville, and Brookline have similar bills in the Legislature.
The Legislature’s Revenue Committee gave the bill a favorable review in June, SHNS reported.
The bill now moves to the House Committee On Bills In The Third Reading. If it moves out of that panel, it would need another favorable House vote to send it to the Senate.
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