Tax Relief

Mayor Wu Indicators Switch Price House Rule Petition to Fund Inexpensive Housing and Present Tax Aid for Seniors

Fees On Property Sales Over $2 Million Will Provide Substantial Funding For Affordable Housing Including Property Tax Relief for Low-Income Seniors

Today, Mayor Michelle Wu joined State Representative Brandy Fluker Oakley, local elected officials, and residents to sign a home rule petition to implement a transfer fee of up to two percent on real estate sales of $2 million or more in the City of Boston. If passed by the Massachusetts Legislature and signed by the governor, the fee will generate nearly a hundred million dollars annually to create and preserve affordable housing in Boston and reduce property taxes for qualified low-income senior homeowners. The legislation is sponsored by State Representative Fluker Oakley. The Home Rule Petition passed the Boston City Council Wednesday.

“Boston’s most pressing challenge is our housing crisis, which has been pushing families out of our city and deepened even more with the pandemic. As we see the transformational impact of federal funding for our recovery, it’s clear that Boston needs a reliable funding source to focus on housing affordability and keep families and seniors in their homes,” said Mayor Michelle Wu. “I’m grateful to Council colleagues for partnering on this urgent issue and many colleagues who have shepherded this issue in previous sessions. I look forward to working closely with our state partners on next steps.”

Through the legislation, the first $2 million of the sales price on a home in Boston would be exempt from the fee. For real estate sales over $2 million, the fee collected will be paid by the seller. The funds generated will be allocated to the Neighborhood Housing Trust. The Neighborhood Housing Trust creates new affordable housing and preserves existing affordable housing. Based on 2021 sales in Boston, a two percent fee would have raised an estimated $99.7 million, and would have only affected approximately 700 transactions. Similar proposals were filed in 2019 and 2021.

“I am so excited to see Mayor Wu and the Boston City Council taking action to make housing in Boston more affordable for seniors,” said State Rep. Brandy Fluker Oakley. “I have met with and tested before the City Council about the need for large developers of luxury apartments to pay their fair share, which would allow us to expand property tax exemptions for seniors on a fixed income and make housing in Boston more affordable.”

Some transfers between family members are exempt from the fee, and the City of Boston may adopt additional exemptions for economically vulnerable populations, affordable housing developments, deed-restricted housing, owner-occupant homeowners, beneficiaries of a city-approved homebuyer program, or others .

“This bill is about housing stability,” said State Senator and City Councilor Lydia Edwards. “This is a great opportunity for our city. It balances raising revenue with granting relief for our seniors.”

“Today Boston is taking a major step to ensure we have adequate funds to create and preserve affordable housing, and to provide much needed tax relief to our seniors who have dedicated their lives to our great city,” said City Councilor Kendra Lara. “As we combat the housing crisis and recover from the pandemic, we must protect our seniors who have been bearing the brunt of the impacts of both displacement and COVID-19. I look forward to working with our colleagues at the state house to get this passed.”

The home rule petition also seeks to expand property tax relief for low-income seniors by modifying the eligibility criteria for the 41C program and increasing the exemption. These changes will modernize the criteria and provide much-needed financial assistance to a vulnerable population.

The 41C program provides tax assistance to residents 65 years or older who are owner-occupants. Specifically, this legislation would:

  • Increase the minimum exemption from $1,000 to $1,500, and the total possible exemption from $2,000 to $3,000; other
  • Broaden eligibility by replacing the fixed income limits with the 50% Area Median Income figure and doubling the asset limit levels.

These changes would take effect for the Fiscal Year 2023, and the income limits for that year would increase from the current $24,911 to $47,000 for single individuals and $37,367 to $53,700 for a couple. The asset limits would increase from $40,000 to $80,000 for single individuals, and from $55,000 to $110,000 (the asset limits exclude the value of the applicant’s home).

Currently, approximately 4,600 Boston senior homeowners are income-eligible for the 41C tax exemption. The legislation will expand eligibility to approximately 8,700 senior homeowners. Nearly half of those senior homeowners are severely housing cost-burdened, paying more than 50 percent of their income to housing costs.

Ultimately, the City of Boston will have the ability to determine the final rate for the fee, collection method, and any exemptions that may exist.

About the Mayor’s Office of Housing (MOH)

The Mayor’s Office of Housing is responsible for housing people experiencing homelessness, creating and preserving affordable housing, and ensuring that renters and homeowners can obtain, maintain, and remain in safe, stable housing. The department develops and implements the City of Boston’s housing creation and homelessness prevention plans and collaborates with local and national partners to find new solutions and build more housing affordable to all, particularly those with lower incomes. For more information, please visit the MOH website.

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