What property tax changes are on the table in Massachusetts?
Every week, Mansion Global poses a tax question to real estate tax lawyers. Here is this week’s question
Q. I am considering buying a house in Boston or surrounding suburbs. Are there any property tax changes I should keep in mind?
A. Mayor Michelle Wu plans to introduce a transfer tax on homes priced over $2 million in Boston, she announced last month. Revenue from the levy would support affordable housing in the Massachusetts town.
The exact amount of the tax rate has yet to be announced, but the revenue “generated would be dedicated to the Neighborhood Housing Trust for the development and preservation of affordable housing,” according to a statement from Ms Wu’s office in December.
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Similar legislation was passed by the city council in 2019, but failed to pass the Massachusetts legislature. Ms Wu, who was elected in November, said she would submit the new version of transfer fee legislation to the Boston City Council early this year.
In addition to funding affordable housing, the plan “would also include property tax relief for senior homeowners who are long-time homeowners,” she said in a statement.
Boston home buyers already pay a 1% property surcharge on their annual tax bill to support the Community Preservation Act, which was approved by city voters in 2016. In addition to affordable housing, the Community Preservation Fund supports historic preservation, open spaces and public recreation. .
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Meanwhile, Massachusetts congressmen have proposed a bill that would give cities and towns the ability to add a 0.5% and 2% transfer tax on real estate transactions above the sale price. state median for a single-family home.
The tax would fund affordable housing in cities and towns across the state, according to state Representative Mike Connolly, a Democrat from Cambridge, who sponsored the bill in the Massachusetts House of Representatives. State Senator Joanne Comerford, a Democrat serving Hampshire, Franklin and Worcester, is the Senate bill’s sponsor.
“Our real estate transfer fee proposal will help generate needed revenue by giving municipalities the opportunity to capture a small fraction of the wealth generated by the real estate market,” he said in an email.
The median price of a single-family home in Massachusetts rose 10.5% to $525,000 in December, according to a report released earlier this month by the Massachusetts Association of Realtors.
A hearing on the proposal was held in October, and the housing committee has until
February 2 to make a recommendation on whether to move forward with the bill.
[Editor’s Note: An earlier version of this article incorrectly stated that Boston buyers pay a 1% property tax surcharge on transactions. They pay the surcharge on their annual tax bill.]
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