Legislature takes testimony on levying real estate transfer taxes

The Legislature’s Revenue Committee heard testimony Wednesday from opponents and proponents of levying real estate transfer taxes to combat the housing crisis. 

The push comes as housing prices and mortgage rates continue to rise, pricing people out of the market. 

Officials from 10 communities across the state are lobbying for levying a transfer fee of varying amounts on property sales. The money would be earmarked for affordable housing. The communities and affordable housing advocates are also pushing the Legislature to pass a bill that would change state law to allow cities and towns to levy such taxes without getting permission from the Legislature and the governor.

The cities and towns are Amherst, Arlington, Boston, Cambridge, Chatham, Concord, Provincetown, Somerville, Truro, and Wellfleet.

Some of these communities has been pushing for this tax for years. Concord, for example, voted for it in 2019 and 2023. 

Pamela Schwartz of the Western Massachusetts Network to End Homelessness said her region is facing an affordable-housing shortage of 11,000 units that is projected to grow to 19,000 by 2025. She cited unprecedented rates of homelessness in the region and a 36% year-over-year increase in evictions, and she advocated for letting communities assign transfer fees without the state’s permission so the money can be pulled from rural communities into regional housing funds.

“It would shorten a process that desperately needs to be shortened so that communities can decide how a transfer fee would address their affordable housing needs,” Schwartz said.

Mark Kavanagh, Government Affairs Committee chair for the Massachusetts Association of Realtors, voiced his strong opposition at the hearing.

“We staunchly oppose taxing homes, because as proposed in several bills on today’s agenda, we find that it is contrary to what we are trying to do with affordability,” Kavanagh said. “Realtors are on the frontlines of the housing crisis.”

“Transfer taxes would harm our communities … strip homeowners of equity, increase income stratification, constrain diversity and inclusivity, and enforce preexisting patterns of de facto segregation,” Kavanagh said.

“For every $1,000 increase in the price of a home, 1,727 Massachusetts residents are priced out,” he said, adding that the transfer taxes would increase competition for homes below that price threshold.

In 2022, Mayor Michelle Wu proposed a 2% transfer tax or property sales of $2 million or more in the city of Boston. 

“Housing is health, safety, and opportunity —and housing stability must be the foundation for our recovery from the pandemic,” Wu said at the time. “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 Revenue committee has until February to make a final vote.

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