Mayor Wu proposes transfer fees on some real estate sales to fund affordable housing

The fees will be used to generate additional funds for affordable housing in Boston and provide housing stability support, including property tax relief for low-income seniors.

Mayor Michelle Wu today filed a Bylaws petition that would implement a transfer fee of up to 2% on real estate sales of $2 million or more in the City of Boston, a plan that would generate tens of millions a year to create and preserve affordable housing. In Boston. The bill would also expand property tax relief for seniors.

“Housing is about health, safety and opportunity, and housing stability must be the foundation of our recovery from the pandemic. As the cost of housing has become increasingly out of reach for families, we must take urgent action to keep families in their homes and build a city for all,” said Mayor Michelle Wu. “I am grateful to all of the advocates and colleagues who have championed this proposal for many years and to the partners who have helped inform this updated version.”

Transfer fee

The proposal would allow the City of Boston to charge fees of up to 2% on real estate sales. The first $2 million of the sale price would be royalty free. The fees would be paid by the seller and the funds generated would be allocated to the Neighborhood Housing Trust. The Neighborhood Housing Trust is creating new affordable housing and preserving existing affordable housing. Funds can also be used to support programs that promote stability for older homeowners and low-income renters, and address disparities in housing access and opportunity.

This legislation would generate new resources for affordable housing and discourage rapid repeat property sales. Certain transfers are exempt from the levy, including transfers between family members, and the City may enact additional exemptions for economically vulnerable populations, affordable housing developments, deed-restricted housing, homeowners, beneficiaries of a home ownership program approved by the city or others. .

Based on 2021 sales in Boston, a 2% fee would have brought in about $99.7 million.

Similar proposals were filed in 2019 and 2021.

“It’s a step in the right direction,” said Boston City Councilwoman and State Senator Lydia Edwards, one of the original sponsors of the 2019 proposal. “It helps the City of Boston find sustainable sources of housing funding and also provides our seniors and landlords with tax relief. I look forward to working with my colleagues at City Council and State House to get this transfer fee passed.

“We need to enact policies that will combat displacement, create affordable housing and help our elderly neighbours,” said Councilor Kendra Lara, Chair of the City Council Committee on Housing and Community Development. “This legislation will raise the necessary funds so that we can continue to respond to the housing crisis with the urgency needed.”

Senior tax exemption

The house rules petition also expands property tax relief for low-income seniors by changing the eligibility criteria for the 41C program and increasing the exemption amount. These changes will modernize the aging criteria that have shrunk the pool of eligible applicants in recent years and provide much-needed financial assistance to a vulnerable population.

The 41C program provides tax assistance to residents age 65 and older who are homeowners. Specifically, this bill:

  • Increase the basic exemption from $1,000 to $1,500 and the total possible exemption from $2,000 to $3,000; and
  • Expand eligibility by replacing fixed income limits with the figure of 50% of regional median income which is adjusted on an annual basis, and doubling asset limit levels.
  • If passed, these changes would take effect for the 2023 fiscal year and the income limits for that year would increase from $24,911 to $47,000 for singles 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 (asset limits exclude the value of the applicant’s home).

“This modest levy on those who benefit from Boston’s success will provide much-needed relief to seniors who helped build this city but are now struggling to stay. We commend the mayor and council for their commitment to affordable housing and to Boston’s senior community,” said Edna Pruce88, president of the Massachusetts Senior Action Council and owner of Mattapan.

Currently, approximately 4,600 Boston senior homeowners are eligible for the 41C tax exemption. If passed, the legislation would expand eligibility to about 8,700 senior homeowners. Nearly half of these senior homeowners are heavily burdened by housing costs (spending more than 50% of their income on housing costs).

The self-government petition has been submitted to the city council, where it must be approved before being signed by the mayor, and then sent to the Massachusetts Legislature and governor for approval. If approved by the state, the City would have the ability to determine the final fee rate, method of collection and any exemptions that may exist.

About the Mayor’s Office of Housing (MOH)

The Mayor’s Housing Office is responsible for housing people who are homeless, creating and maintaining affordable housing, and ensuring that tenants and landlords can obtain, maintain and remain in safe and stable housing. The department develops and implements the City of Boston’s housing creation and homelessness prevention plans and works with local and national partners to find new solutions and build more affordable housing for all, especially for low-income people. For more information, please visit the Ministry of Health website.

About the Neighborhood Housing Trust Fund (NHT)

The NHT Fund supports homeownership, rental, co-op and transition projects. The fund finances projects aimed at households whose income is equal to or less than 80% of the AMI and gives preference to populations who face obstacles in finding housing, including the elderly, veterans, artists , young people and people with disabilities. Priority is given to projects serving the greatest number of low-income households. The program includes a preference for mixed-income developments, acquisition of unrestricted occupied properties, projects located in high-cost neighborhoods where most NHT funds are generated, affordable developments at risk of losing affordability. Preference is also given to certified Minority-Owned Business (MBE) development teams owning 20% ​​or more of the proposed project. The Neighborhood Housing Trust Fund is funded through the Commercial Project Link Fee Payment Scheme.

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