Transfer Fee

Full title: An Act granting a local option for a real estate transfer fee to fund affordable housing (H.2747 / S.1771)

Lead Sponsors: Rep. Mike Connolly; Sen. Jo Comerford

Committee: Joint Committee on Revenue

The Issue

Massachusetts faces a growing affordable housing crisis. To rent the average 2-bedroom apartment in Massachusetts requires an income equal to $37.97 per hour, more than twice the minimum wage. Home ownership has become increasingly out of reach, as the state’s median home price has passed $600,000. The high cost of housing has led to displacement, and in a growing number of municipalities, the local workforce can no longer afford to live there. As state law prevents municipalities from generating new funding for affordable housing, the crisis deepens. 

The Solution: Smart Flexibility for the Distinctiveness of Each Community

Under the bill, municipalities could impose a transfer fee between 0.5% and 2% on real estate transactions above $1 million (or above the county median sale price for a single family home if the county’s median sales price is below $750,000) to create a dedicated revenue stream for affordable housing production and preservation.

• Fee: No less than 0.5% and no more than 2%, with the possibility of different fees for different types of property

• Payer: Up to the municipality. Cities and towns can decide whether the fee will be borne by purchaser, seller, or some allocation between the two.

• Threshold: The bill would exempt transfers for less than $1 million or such higher threshold amount as set by the city or town municipality since each community knows its housing market best (If the county median sales price is below $750,000, the exemption threshold would be transfers above the county median sales price. This is largely a Western Mass provision.) Example: Boston’s home rule petition relates to property over $2 million (and only the portion above $2 million)

• Further Exemptions: Cities and towns are able to make them as they see fit.

• Cities & Towns with Such Proposals:  Arlington, Boston, Brookline, Cambridge, Concord, Chatham, Nantucket, Provincetown, Somerville, Truro, and Wellfleet have filed Home Rule Petitions.