Mass. House advances bill to create 2% transfer tax on large Boston real estate transactions

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Stakeholders disagree on whether the tax would reduce or worsen Boston’s affordable housing crisis.

The Massachusetts State House. David L. Ryan/Globe Staff

The Massachusetts House of Representatives introduced a bill on Monday that would create a new tax on big-budget real estate transactions in the city of Boston, the State House News Service (SHNS) reported.

While supporters of the bill say it would help tackle Boston’s affordable housing crisis, critics say there are better sources of funding and the tax is counterproductive because landlords would pass on increased costs on tenants.

The bill would institute a transaction fee of up to 2% on real estate transactions over $2 million to be paid by the seller. The money would then be used to create and preserve affordable housing for Boston’s seniors through Boston’s Neighborhood Housing Trust.

The bill would also reduce property taxes for Boston seniors through an expanded tax exemption under which thousands of additional seniors would qualify.

Boston Mayor Michelle Wu, who helped push the measure through the Boston City Council in March, is a leading supporter of the bill. The mayor’s office expects the tax to generate nearly $100 million a year, based on 2021 figures.

If the tax had been in effect in 2021, the mayor’s office said, only about 700 transactions would have been affected. According The Boston Heraldi.e. approximately 7% of total transactions.

“Boston’s most pressing challenge is our housing crisis, which has driven families out of our city and has gotten even worse with the pandemic,” Wu said in a tax press release in March.

“As we see the transformational impact of federal funding for our recovery, it’s clear that Boston needs a reliable source of funding to focus on housing affordability and keep families and seniors in their homes. .”

But some key stakeholders don’t think Wu’s tax would be a good solution to the housing crisis.

According to HeraldThe Greater Boston Real Estate Board and the Massachusetts Association of Realtors testified against the tax at the State House in June.

The Herald reported that the two organizations cited Boston’s approval process for building new housing, which they described as difficult and time-consuming, as the problem.

“It’s not a problem of funding – it’s a problem of producing affordable housing,” Dawn Ruffini, of the organization Realtors, reportedly said. “Transfer taxes will hurt our communities.”

Governor Charlie Baker also said in March that he opposed the tax.

“As a rule, I don’t support this stuff,” Baker previously said. “And I especially wonder why we’re doing this at a 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 for housing.”

This isn’t the first time Boston has tried to push the bill through. Former Boston Mayor Marty Walsh signed an earlier version of the bill after the Boston City Council passed it in 2019, but it never passed the Legislature.

Boston is also far from the only city 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 goes to the House Committee on Bills for third reading. If he leaves that panel, it would take another favorable House vote to send him to the Senate.

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