Mayor Michelle Wu has put forth a proposal to levy a transfer tax on real estate sales in Boston over $2 million — a move that could bring in nearly $100 million annually to help fund affordable housing initiatives, her administration says.
Wu, on Monday, filed a home rule petition that, if approved, would establish a fee of up to 2 percent on certain real estate sales to be paid by sellers.
Such a tax would have brought in an estimated $99.7 million for the city in 2021.
The petition also includes expanded property tax cuts for low-income seniors by rewriting eligibility criteria in the city’s 41C program, which gives tax assistance to residents over the age of 65 who live in homes that they own. The changes would allow for several thousand more homeowners to become eligible based on their income.
“Housing is health, safety, and opportunity—and housing stability must be the foundation for our recovery from the pandemic,” Wu said in a statement. “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.”
The transfer fee proposal follows similar petitions filed in 2019 and 2021. Home rule petitions must be approved by the City Council and signed by the mayor and then sent to the Legislature and governor for approval.
The law would generate funding for the city’s Neighborhood Housing Trust, which creates and preserves affordable housing. The proposal could also fuel programs that bolster senior homeowner and low-income renter stability and housing access disparities, Wu’s staff said in a press release.
The petition would “discourage rapid repeat sales of properties” and place exemptions on certain transactions, including transfers made between family members, according to the Wu administration.
City officials could eventually offer other exemptions for “economically vulnerable populations, affordable housing developments, deed-restricted housing, owner occupant homeowners, beneficiaries of a city-approved homebuyer program, or others,” the administration said.
Boston City Councilor and state Sen. Lydia Edwards, who was an original sponsor of the 2019 filing, called the latest version of the proposal “a step in the right direction.”
“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,” Edwards said in a statement. “I look forward to working with my colleagues on the City Council and at the State House to get this transfer fee passed.”
The home rule petition also stands to give select seniors a break on their property taxes, through the money collected under the transfer tax.
According to Wu’s staff, changes proposed to the 41C tax assistance program would “modernize the aging criteria which has shrunk the pool of eligible applicants in recent years.”
Specifically, the home rule petition would bump up the program’s base exemption from $1,000 to $1,500 and the total potential exemption from $2,000 to $3,000.
Other changes include broadening eligibility in the program by swapping fixed income limits with 50 percent of the area median income, or AMI, and doubling the asset limit levels, officials said.
“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,” Wu’s office said. “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).”
There are currently approximately 4,600 senior homeowners who are income eligible for the 41C tax exemption, according to city officials. Amendments under the home rule petition would expand eligibility to about 8,700 senior homeowners.
“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,” Edna Pruce, an 88-year-old Mattapan homeowner who serves as president of the Massachusetts Senior Action Council, said in a statement.