The Boston City Council’s Government Operations Committee held a virtual hearing Thursday on Mayor Michelle Wu’s proposed real estate transfer tax, during which councilors indicated broad support for the proposed transfer tax and the property tax relief for the elderly.
The proposed tax would apply to properties that sell for $2 million or more and would raise money for affordable housing through the city’s Neighborhood Housing Trust Fund. The real estate transfer tax has been linked by the Wu administration to an increase in the property tax exemption for the elderly, raising the income and asset thresholds to allow more homeowners aged 65 and no longer benefit from the tax relief. The plan, if approved by the city council, would require the state legislature to approve the so-called “bylaws petition.”
But unlike the version that cleared the council in 2019 and died in Beacon Hill, the tax would only be assessed on the value of a property over $2 million, rather than the full amount.
If the legislature were to approve the bylaws petition this year, the city council would have to pass an ordinance to implement the policy, in which case decisions could be made on where to set the transfer tax rate until at 2% and whether to offer exemptions for non-profit organizations, sales to developers of affordable housing or other types of properties.
State Senator Lydia Edwards, who continues to serve on the board after joining the Senate last month, also raised the possibility of raising the transfer tax to apply lower rates to properties that sell for between $2 million and $3 million. dollars, for example, with the top tax rate of 2% applying only to the most expensive properties.
“I think that would be helpful and maybe calm some in the real estate community,” Edwards said.
Tax would fall on downtown condo owners
Based on 2021 sales data, city officials project the tax would generate $99.7 million annually, about $28 million less than the previous version. The city budget currently allocates about $71.5 million for affordable housing programs.
Tim Davis, deputy director of policy and research for the city of Boston, said that in 2021, transfer taxes would have impacted only 704 real estate transactions, mainly in downtown neighborhoods and on the sale high-end condominiums.
Nicholas Ariniello, assessment commissioner, said the 2 per cent transfer tax came with a proposal to raise the income and asset thresholds that allow older people to qualify for property tax exemptions in Boston.
Wu is proposing to increase the maximum exemption from $2,000 to $3,000 by raising the income limits from $24,911 for a single filer and $37,367 for a married couple to $47,000 and $53,700 respectively. Asset limits, not including the value of a seniors’ home, would also double to $80,000 for a single resident and $110,000 for a married couple.
The income threshold would in future be linked to the median income of the region and set at 50%.
“Really, we’re changing all the elements of the program to be something that we think really makes more sense for the region,” Ariniello said.
While officials said it was difficult to estimate how many seniors would be affected by the expansion of the property tax exemption program, Ariniello said that based on income eligibility criteria alone , Wu’s proposal could potentially double the applicant pool from 4,600 owners to 8,700 and increase participation in the program. about 500 to 1000.
“Broad support” for the measure
Councilman Ricardo Arroyo, who chaired the committee hearing, said there was “broad support” in the council for sending the bylaws petition to the State House, and the vast majority of councilors agree. are in favor of the proposal.
Councilor Frank Baker, however, questioned the decision to couple transfer duties with housing relief for the elderly.
“We should be helping our seniors and having these conversations without tying them to a transfer fee,” Baker said.
The Savin Hill resident said he does not support the transfer tax as he believes it ultimately hurts small landowners.
“It’s going to be tough for members of the State House to vote on a tax hike now in an economy where inflation is up about 7% and rates of getting money are rising,” Baker said. .
Councilwoman Kendra Lara disagreed with Baker, saying she supported the strategy of trying to sweeten lawmakers’ petition by attaching property tax relief for seniors to it.
“I am in favor of keeping them together. I think that makes it a more appealing Bylaws petition,” Lara said.