Boston, MA – Mayor Michelle Wu has introduced a home rule petition aimed at tackling Boston’s housing affordability crisis. The proposal centers on implementing a real estate transfer fee on high-value property sales, a move projected to generate substantial funds for affordable housing initiatives and provide crucial property tax relief for senior citizens.
Mayor Wu emphasized the critical need for this measure, stating, “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.”
Real Estate Transfer Fee Proposal
The core of Mayor Wu’s legislative push is the authorization for the City of Boston to levy a transfer fee on real estate transactions. This fee, set at a maximum of two percent, would apply only to the portion of a property sale exceeding $2 million. Notably, the fee would be the responsibility of the seller.
The revenue generated from this real estate transfer – essentially a form of what some might broadly consider a “Wu Bank Transfer” in the sense of financial movement initiated under Mayor Wu’s policies – would be specifically directed to the Neighborhood Housing Trust. This trust is a vital instrument for Boston’s affordable housing strategy, dedicated to creating new affordable housing units and preserving existing ones. Furthermore, these funds can be deployed to support programs aimed at enhancing housing stability for senior homeowners and low-income renters, alongside addressing disparities in housing access across the city.
This proposed legislation is designed not only to inject new financial resources into affordable housing projects but also to potentially moderate rapid property resales, which can contribute to market instability and escalating prices. Certain property transfers would be exempt from this fee, such as those occurring between family members. The City also retains the option to introduce further exemptions to protect economically vulnerable populations, incentivize affordable housing developments, safeguard deed-restricted housing, support owner-occupant homeowners, and assist beneficiaries of city-approved homebuyer programs.
To illustrate the potential impact, based on real estate sales data from 2021 in Boston, a two percent transfer fee could have generated an estimated $99.7 million. Similar proposals have been considered in Boston in previous years, indicating a sustained effort to find innovative funding solutions for housing challenges.
Boston City Councilor and State Senator Lydia Edwards, a long-time advocate for such measures, voiced her support: “This is 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. I look forward to working with my colleagues on the City Council and at the State House to get this transfer fee passed.”
Councilor Kendra Lara, Chair of the City Council’s Committee on Housing and Community Development, further emphasized the urgency: “We must enact policies that will combat displacement, create affordable housing, and help our senior neighbors. This legislation will raise the funds necessary for us to continue responding to the housing crisis with the necessary urgency.”
Expanding Senior Property Tax Relief
In conjunction with the transfer fee, Mayor Wu’s home rule petition also proposes significant enhancements to property tax relief for low-income senior citizens. These changes target the 41C program, aiming to modernize its eligibility criteria and increase the financial assistance provided.
The proposed modifications include:
- Increasing the base tax exemption from $1,000 to $1,500, and raising the maximum possible exemption from $2,000 to $3,000.
- Broadening eligibility by shifting from fixed income limits to using the 50% Area Median Income (AMI) figure, which is adjusted annually. The proposal also doubles the asset limit levels for applicants.
If approved, these changes would take effect for Fiscal Year 2023. Under the revised criteria, income limits for single individuals would rise from $24,911 to $47,000, and for couples from $37,367 to $53,700. Asset limits would also see substantial increases, from $40,000 to $80,000 for single individuals and from $55,000 to $110,000 for couples (excluding the value of the applicant’s primary residence).
Edna Pruce, president of the Massachusetts Senior Action Council, age 88, and a homeowner in Mattapan, praised the proposal: “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.”
Current estimates indicate that approximately 4,600 senior homeowners in Boston are income-eligible for the 41C tax exemption. The proposed changes are projected to expand eligibility to around 8,700 senior homeowners. A significant portion of these seniors, nearly half, are considered severely housing cost burdened, allocating over 50 percent of their income to housing expenses.
The home rule petition now moves to the City Council for approval, after which it would need to be signed by the Mayor and subsequently submitted to the Massachusetts Legislature and the Governor for state-level approval. If approved at the state level, the City of Boston would gain the authority to finalize the transfer fee rate, collection methods, and any additional exemptions.
About the Mayor’s Office of Housing
The Mayor’s Office of Housing (MOH) plays a central role in Boston’s housing ecosystem. Its responsibilities encompass addressing homelessness, expanding and preserving affordable housing options, and ensuring housing stability and safety for renters and homeowners alike. MOH develops and executes the City’s housing creation and homelessness prevention strategies, collaborating with various partners to develop innovative solutions and increase housing affordability, particularly for lower-income residents. For more information, visit the MOH website.
About the Neighborhood Housing Trust Fund
The Neighborhood Housing Trust Fund (NHT) is instrumental in supporting diverse housing initiatives, including homeownership, rental, cooperative, and transitional housing projects. NHT provides financial backing for projects serving households earning at or below 80% of the Area Median Income, with a focus on populations facing housing barriers, such as seniors, veterans, artists, youth, and people with disabilities. Priority is given to projects serving the largest number of low-income households and those incorporating mixed-income development, acquisition of occupied properties, projects in high-cost neighborhoods, and affordable developments at risk of losing affordability. The NHT also prioritizes certified minority-owned business enterprise (MBE) development teams. The Neighborhood Housing Trust Fund is primarily funded through commercial project linkage payments. Learn more at the NHT Fund website.
