On January 31, Boston Mayor Michelle Wu filed a home rule petition proposing a transfer fee of up to two percent on Boston real estate sales over $2 million. As stated by the mayor’s office, the proposed plan is meant to generate annual revenue into the tens of millions for the purpose of creating affordable housing in the city. In addition, the legislation would expand property tax relief for senior homeowners. Critically, the legislation could substantially impact real estate investors in the city by potentially discouraging rapid property sales and halting reinvestment opportunities.
What is the Mayor’s Transfer Fee Proposal?
Under the mayor’s proposal, a transfer fee of up to two percent would be imposed on any real estate sales in the city over $2 million. However, the fee would not apply to the first $2 million of the sales price. The transfer fee would be the seller’s responsibility to pay, with the funds being distributed to the Neighborhood Housing Trust. Certain real estate transfers would be exempt from the transfer fee, including those made between family members.
While similar proposals were made in 2019 and 2021, they failed to move forward. According to the Boston real estate sales in 2021, $99.7 million in revenue would have been generated with the two percent transfer fee.
Other Proposed Legislation Regarding Real Estate Transfer Fees in Massachusetts
A bill has also been proposed by members of the Massachusetts legislature that would permit cities and towns throughout the Commonwealth to add transfer fees ranging from .5% to 2% to home purchase sales. Specifically, the fee would be imposed on the purchase price of single-family homes that fall above the statewide median, which is currently $480,000 — or the county median price if it is lower.
Similar to the proposed transfer fee legislation in Boston, the purpose of the bill is to generate revenue toward affordable housing. The legislation would allow for a number of exemptions, including transfers made upon death, bankruptcy, or those made to a municipality or charitable organization.
The bill would also authorize municipalities to charge a transfer fee of up to six percent on “speculative sales.” These transactions are defined as the sales of properties sold within one year at a price of three times the median sale price in the state. However, exceptions would be allowed in the event of relocation due to employment changes or if it was necessary for the seller to liquidate their assets.
Contact an Experienced Massachusetts Real Estate Attorney
Whether you’re investing in a property or considering buying a family home, it’s critical to have a knowledgeable real estate attorney who can advise you throughout the process. Continental Law Group provides high-quality representation for commercial and residential real estate matters throughout the Commonwealth of Massachusetts and in New Hampshire. Our offices are conveniently located in Boston and Salem, Massachusetts, and Portsmouth, New Hampshire. Call (617) 616-8210 to learn more about CLG’s real estate services.