Mayor Wu Proposes Transfer Fee on Certain Real Estate Sales to Fund Affordable Housing

Mayor Michelle Wu today filed a home rule petition that would implement a transfer fee of up to two 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 create and preserve affordable housing in Boston. The legislation would also expand property tax relief for seniors.

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

Transfer Fee

The proposal would authorize the City of Boston to impose a fee of up to two percent on real estate sales. The first $2 million of the sales 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 preserves existing affordable housing. Funds also may be used to support programs that promote senior homeowner and low-income renter stability, and addresses disparities in housing access and opportunity. 

This legislation would generate new resources for affordable housing and discourage rapid repeat sales of properties. Some transfers are exempt from the fee, including transfers between family members, and the City may adopt additional exemptions for economically vulnerable populations, affordable housing developments, deed-restricted housing, owner occupant homeowners, beneficiaries of a city-approved homebuyer program, or others.

Based on 2021 sales in Boston, a two percent fee would have raised an estimated $99.7 million.

Similar proposals were filed in 2019 and 2021. 

“This is a step in the right direction,” said Boston City Councilor and State Senator Lydia Edwards, one of the original sponsors of the 2019 proposal. “This helps the city of Boston come up with sustainable sources of funding for housing and also give our seniors and homeowners some tax relief. I look forward to working with my colleagues on the City Council and at the State House to get this transfer fee passed.”

“We must enact policies that will combat displacement, create affordable housing, and help our senior neighbors,” said Councilor Kendra Lara, Chair of the City Council’s Committee on Housing and Community Development. “This legislation will raise the funds necessary for us to continue responding to the housing crisis with the necessary urgency.”

Senior Tax Exemption

The home rule petition also expands property tax relief for low-income seniors by modifying the eligibility criteria for the 41C program as well as increasing the amount of the exemption. These changes will modernize the aging criteria which has shrunk the pool of eligible applicants in recent years and will provide much needed financial assistance to a vulnerable population. 

The 41C program provides tax assistance to residents 65 years or older who are owner-occupants. Specifically, this legislation would:

• Increase the base exemption from $1,000 to $1,500, and the total possible exemption from $2,000 to $3,000; and
• Broaden eligibility by replacing the fixed income limits with the 50% Area Median Income figure which is adjusted on an annual basis, and doubling the asset limit levels.
• If passed, these changes would take effect for Fiscal Year 2023, and the income limits for that year would increase from the current $24,911 to $47,000 for single individuals, and from $37,367 to $53,700 for a couple. The asset limits would increase from $40,000 to $80,000 for single individuals, and from $55,000 to $110,000 (the asset limits exclude the value of the applicant’s home).

“This modest fee on those who prosper from Boston’s success will provide much-needed relief to seniors who helped build this city but now struggle to remain. We applaud the mayor and council for their commitment to affordable housing and to Boston’s senior community,” said Edna Pruce, age 88, president of the Massachusetts Senior Action Council, and Mattapan homeowner.

Currently, approximately 4,600 Boston senior homeowners are income-eligible for the 41C tax exemption. If passed, the legislation would expand eligibility to approximately 8,700 senior homeowners. Nearly half of those senior homeowners are severely housing cost burdened (paying more than 50 percent of their income to housing costs).

The home rule petition has been submitted to the City Council, where it must be approved before being signed by the Mayor and then sent to Massachusetts Legislature and the Governor for approval. If approved by the state, the City would have the ability to determine the final rate for the fee, collection method, and any exemptions that would exist. 

About the Mayor’s Office of Housing (MOH)

The Mayor’s Office of Housing is responsible for housing people experiencing homelessness, creating and preserving 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 housing creation and homelessness prevention plans and collaborates with local and national partners to find new solutions and build more housing affordable to all, particularly those with lower incomes. For more information, please visit the MOH website.

About the Neighborhood Housing Trust Fund (NHT)

The NHT Fund supports homeownership, rental, cooperative and transitional, housing developments. The fund provides financing for projects serving households earning at or below 80% AMI and gives preference to populations that face barriers in securing housing including seniors, veterans, artists, youth 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 of NHT funds are generated, affordable developments at risk of losing affordability. Preference is also given to certified minority-owned business enterprise (MBE) development teams with ownership of 20% or more of the proposed project. Neighborhood Housing Trust Fund is funded through the commercial project linkage payment fee system.