The Boston City Council Wednesday passed a measure from Mayor Michelle Wu that would expand senior property tax relief while imposing a new 2% fee on real estate sales exceeding $2 million.
The measure, a home rule petition, must now be signed by the mayor, then approved by the Legislature and the governor before going into effect.
The new tax would not apply to the first $2 million of the sale, only the amount above that.
Councilor Ricardo Arroyo, who steered the proposal through the Council, said the measure is estimated to produce nearly $100 million in new revenue every year, which would go into the Neighborhood Housing Trust Fund. He explained that the impacted properties would "largely" be multi-million dollar condos and large-scale commercial properties, most of which are situated downtown.
"We asked the administration to give us the direct number of properties that would've been eligible for this transfer fee this year and it was 704 properties," Arroyo said.
Though the Neighborhood Housing Trust Fund will take in the funds, according to the city, it currently lacks duly appointed trustees. The home rule petition also gives the council the right to dip into the fund for housing-related expenditures with a separate ordinance.
Simultaneously, the proposal would expand property tax relief for senior homeowners by adjusting income and asset eligibility limits, boosting their total potential exemption from $2,000 to $3,000.
The Council passed the proposal with a 10-1 vote. Dorchester Councilor Frank Baker was the lone vote against it, insisting that the tax relief and new tax should be considered separately.
Arroyo said the proposal would hit those "flipping" houses, who buy properties, deck them out with upgrades then re-sell at higher price points.
If implemented, the council will re-evaluate the $2 million threshold every three years in an effort to monitor and adjust for inflation. The idea is to keep homeowners whose property values go up from getting swept up in the pool of investment-related sales.
Certain transactions would be exempt from the fee, like transfers between family members and transfers to the U.S. government. Another category, transfers of convenience, which will be defined in a later council ordinance if the petition wins legislative and gubernatorial approval, would also be exempt.
Wu, who sent the proposal to the council earlier this year, is expected to sign and send it to the Legislature in the coming days.
