The idea of the transfer tax is not new. Mayor Marty Walsh has made it part of his housing agenda since 2019. Other communities, like Somerville and Nantucket, have been trying for years to tap into real estate sales to get more funds for affordable housing. But the route to that pot of money must go through Beacon Hill, and lawmakers have been reluctant to give communities that option.
Mayor Wu, however, offered a Boston-only proposal that’s far more specific than those earlier efforts, and with an added sweetener for low-income seniors trying to stay in their own homes.
His plan proposes a transfer tax of up to 2% on real estate sales of $2 million or more (and exempting the first $2 million from the tax for properties over that amount). It exempts transfers between family members and leaves open the possibility of exemptions for non-profit organizations and sales to developers who actually build affordable housing. The tax would be levied on the seller.
Based on home sales in 2021, city officials estimate the tax could raise $99.7 million a year and last year would have impacted 704 sales, city officials said.
The added allure this time around is an increase in the income and asset thresholds for tax relief for low-income seniors who own their own homes, aimed at nearly doubling the pool of claimants for these tax exemptions. 4,600 owners to some 8,600.
The income limits for this first year would increase from the current $24,911 to $47,000 for a single owner and from $37,367 to $53,700 for a couple. Asset limits would increase from $40,000 to $80,000 for singles and from $55,000 to $110,000 for a couple (excluding home value). And now the income limits, rather than being a fixed number, would be indexed to the median income of the zone adjusted annually.
In fact, if the Wu administration is serious about winning Beacon Hill, it should also peg that $2 million in revenue to a comparable asset base, or it will also quickly become obsolete, hitting taxpayers that it doesn’t. was ever intended to touch.
As the administration noted in its announcement, in addition to providing a reserve of money for affordable housing, the tax would “discourage rapid repeat sales of properties.”
Yes, “Flip This House” isn’t just a TV show anymore — or, in fact, the subject of at least 10 TV shows this year.
As the Washington Post recently reported, based on data from real estate firm Redfin, about 25% of home sales in 40 metro areas went to investors — people who had no intention of living in those properties. This was more than double the 2015 rate of around 12%.
Boston was not one of the cities studied, but there is no reason to believe that it is immune to the phenomenon. And before the pandemic, the city had already earned a reputation as a place where international investors could shell out big bucks for some of these new high-end condos. Millennium Towers was among those that benefited early on from an influx of Chinese investors.
This market may have slowed down at the moment, but it’s a market that Wu would surely want to tap into during his inevitable return.
And recently, the idea of a transfer tax won support from the state’s largest private employer, Mass General Brigham, who filed testimony in support of statewide legislation that would would give communities the option of levying a tax of between 0.5% and 2% on property transactions as a way to fund affordable housing.
If such proposals become reality, the next challenge for cities will be to spend the money prudently – considering the dangers of aggregating too much affordable housing in any one geographic area, which can have the effect of concentrating poverty.
Boston’s bill is expected to be considered by the City Council early next month before it can be sent to the Legislature, where the real battle begins. This year should be different – the bill is better than before and the need is greater than ever. Boston is willing and able to solve many of its own housing needs. He should be allowed to do that.
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