An Act establishing local options for generating affordable housing monies
H.2552, introduced by Representative Elizabeth Malia and Senator Jo Comerford
When does the excise tax apply?
The excise tax only has to be paid on sales of certain properties if:
- Your city/ town has an Affordable Housing Trust Fund or Community Preservation Committee
- The property sells for 300% of the previous year’s median home price in the surrounding county. In Boston, a property sold today would have to go for $2,007,000 or more for the city to charge the LPE. On Martha’s Vineyard, it would have to cost $2,676,000. The price threshold for the LPE changes with your local housing market’s yearly ups and downs.
How much is the excise tax?
Your city/town can charge anywhere from .5% and 2% of the property’s final price. That $2,007,000 home would be subject to an excise tax of $10,035-$40,140.
What happens to money raised by the tax?
It goes to your city/town’s Affordable Housing Trust Fund or Community Preservation Fund. Then the city/town’s Community Preservation Committee or agency in charge of the Trust Fund gives money from the Funds to affordable housing projects within city/town boundaries (the bill is written so that preservation and construction are permitted uses for the money) using their established procedures.
How much money does it raise?
A 2% tax in Boston would raise $70,000,000 a year for affordable housing at current home prices.
Is Massachusetts the first place to do this?
No. San Francisco has a Luxury Property Excise tax, and applies the revenue to affordable housing. Massachusetts registries of deeds are already allowed to charge a deed excise tax that is lower than 12 other states, but the money they collect doesn’t go to affordable housing. Most of our New England neighbors charge a progressive excise tax; higher taxes on more expensive properties.