The fees will be used to generate additional funds for Boston affordable housing and housing stability assistance, including property tax breaks for low-income seniors.
Mayor Michelle Wu today filed a home rule petition that would introduce a transfer fee of up to 2 percent on real estate sales of $2 million or more in the city of Boston, a plan that would generate tens of millions annually to promote affordable housing Create and Sustain In Boston. The legislation would also expand wealth tax breaks for seniors.
“Housing means health, safety and opportunity – and housing stability must be the foundation of our recovery from the pandemic. As housing costs become increasingly prohibitive for families, we must take urgent action to keep families in their homes and build a city for all,” he said Mayor Michelle Wu. “I am grateful to all of the advocates and colleagues who have championed this proposal over many years, and to all of the partners who have helped inform this updated version.”
The proposal would authorize the city of Boston to levy a fee of up to 2 percent on real estate sales. The first $2 million of the sale price would be exempt from the fee. The fee would be paid by the seller and the funds generated would be allocated to the Neighborhood Housing Trust. The Neighborhood Housing Trust creates new affordable housing and maintains existing affordable housing. Funds can also be used to support programs that promote resilience for aging homeowners and low-income renters, and address inequalities in access to housing and opportunity.
This legislation would create new resources for affordable housing and discourage the quick resale of real estate. Some transfers are exempt from the fee, including transfers between family members, and the city may make additional exemptions for economically vulnerable populations, affordable housing developments, limited housing deeds, homeowners, beneficiaries of a city-approved homebuyer program, or others.
Based on 2021 sales in Boston, a two percent fee would have netted an estimated $99.7 million.
Similar proposals were submitted in 2019 and 2021.
“It’s a step in the right direction,” the spokesman said Lydia Edwards, Boston City Councilwoman and State Senator, one of the original sponsors of the 2019 proposal. “This will help the City of Boston find sustainable sources of financing for housing and provide tax breaks to our seniors and homeowners. I look forward to working with my City Council and State House colleagues to push through this transfer fee.”
“We need to create policies that fight displacement, provide affordable housing and help our elderly neighbors,” he said Councilwoman Kendra Lara, chair of the City Council’s Housing and Community Development Committee. “This legislation will provide the resources needed to continue to respond to the housing crisis with the urgency needed.”
Tax exemption for seniors
The Home Rule petition also expands property tax breaks for low-income seniors by changing the eligibility criteria for the 41C program and increasing the allowance. These changes will modernize the aging criteria that have shrunk the pool of eligible applicants in recent years, and provide much-needed financial support to a vulnerable population.
The 41C program provides tax assistance to residents age 65 and older who are homeowners. Specifically, this legislation would:
- Increase in base exemption from $1,000 to $1,500 and potential total exemption from $2,000 to $3,000; and
- Expand eligibility by replacing fixed income limits with 50% of area median income, adjusted annually, and doubling asset limits.
- If passed, these changes would take effect for fiscal year 2023, and income limits for that year would increase from the current $24,911 to $47,000 for singles and from $37,367 to $53,700 for couples. The asset limits would increase from $40,000 to $80,000 for single people and from $55,000 to $110,000 (the asset limits exclude the value of the applicant’s home).
“This modest fee for those benefiting from Boston’s success will bring much-needed relief to seniors who helped build this city but are now struggling to stay. We applaud the mayor and city council for their commitment to affordable housing and to Boston’s senior community,” he said Edna PruceAge 88, President of the Massachusetts Senior Action Council and homeowner of Mattapan.
Currently, approximately 4,600 senior homeowners in Boston are income-eligible for the 41C tax exemption. If passed, the law would extend eligibility to about 8,700 elderly homeowners. Almost half of these senior homeowners are heavily burdened by housing costs (they pay more than 50 percent of their income on housing costs).
The Home Rule Petition has been presented 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 rate for the fee, the method of collection, and any existing exceptions.
About the Mayor’s Housing Office (MOH)
The Mayor’s Office of Housing is responsible for housing people affected by homelessness, creating and maintaining affordable housing, and ensuring that renters and homeowners can obtain, maintain, and remain in safe, stable housing. The department develops and implements the City of Boston’s plans for housing creation and homelessness prevention, working with local and national partners to find new solutions and build more housing that is affordable for all, particularly those of lower socioeconomic status Income. Visit the MOH website for more information.
About the Neighborhood Housing Trust Fund (NHT)
The NHT Fund supports owner-occupied, rental, cooperative and transitional housing developments. The fund provides funding for projects that serve households with incomes of 80% or less AMI and favors populations facing barriers to securing housing, including seniors, veterans, artists, youth and people with disabilities. Priority will be given to projects that serve the largest possible number of low-income households. The program includes a preference for mixed-income developments, acquisitions of fully occupied properties, projects in expensive neighborhoods where most NHT money is generated, and affordable developments that are at risk of losing affordability. Preference is also given to certified Minority-Owned Business Entity (MBE) development teams that own at least 20% of the proposed project. Neighborhood Housing Trust Fund is funded through the Commercial Project Linking Fee Scheme.