As part of a $4 billion bond bill aimed at increasing affordable housing options in Massachusetts, the Healey administration proposes to grant municipalities the ability to impose a transaction fee of up to 2% on real estate sales.
What this Proposal May Mean for You
At this time, this proposal will require approval from the legislature and is likely to undergo changes in the House and Senate therefore, the specific details on the subject remain pending. Nevertheless, we aim to highlight in the following paragraphs what this bill means by covering several points of interes
The Seller Would Pay the Transaction Fee
The proposal would not impose a fee directly but allow local governments to charge a real estate transaction fee. The fee percentage ranges from 0.5% to 2% and it would only apply to the portion of a property sale exceeding 1 million dollars or the median home sale price in the county.
Projections estimate that the transaction fee would be imposed in less than 14% of all residential real estate transactions. It is not clear how the fee would impact commercial real estate transactions and whether it would apply in situations where ownership is transferred without a sale, such as when an individual moves property into a trust or passes ownership to a family member.
However, the proposal currently includes exemptions to the fee, such as the exemption for property sold for less than the median county sales price for single-family homes or homes sold for less than one million dollars. Furthermore, it would be up to the governing bodies of local cities or towns to adopt the fee.
Tool for the Development of Affordable Housing
While much of the revenue seems to be allocated for new construction and infrastructure, it is possible some of the proceeds could be available for investment in the stabilization of existing housing. Governor Maura Healey described the transaction fee as a “powerful tool” to help “build supportive housing and ensure that our seniors can stay in their homes by channeling 1.8 billion dollars into housing production and preservation, including 425 million dollars for a “housing stabilization and investment fund.”
Managing the Impact of the Transfer Fee
Although the proposal still needs to be adopted at the state level and implemented at the local level, it may make sense for some families to begin planning in the near future and accelerate their timeline for property transfers to avoid the potential impact of the fee. This is especially true in an area with high real estate prices where many transactions may be subjected to the new fee.
The team at Casey Lundregan Burns, P.C. would be happy to review your estate plans and the details of your personal situation to determine whether proactive steps would be advantageous for your family. In the meantime, we will be watching the legislative details closely.