New Report: Local Option Transfer Taxes Would Reduce Sales, Lower Property Values, Generate Minimal Revenue Study Highlights Alternative Ways Massachusetts Should Confront the Housing Crisis
Cities and towns implementing new real estate transfer taxes will lose as much 60 cents for every dollar in new taxes collected while further driving down local property values and doing little to solve the state’s housing crisis, says a new report authored by the Greater Boston Real Estate Board and Building Owners and Managers Association (BOMA) International, with research assistance from the Tufts University Center for State Policy Analysis.
Indeed, the research finds, a 2 percent tax on real estate sales last year would have produced an offsetting loss of nearly 60 cents for every dollar collected, a dramatic inefficiency in the proposals put forward by Boston and other communities, the report found.
The report, “Empowering Cities and Towns to Tackle the Housing Shortage,” highlights the negative impacts transfer taxes would have on the region’s residential and commercial real estate markets. The report notes how, for every one percentage point increase in the transfer tax, sales decline by seven or eight percent. Citing a study previously conducted by the city of Boston, “Empowering Cities and Towns” discusses how a one percent transfer tax lowers prices by one percent. Even when real estate sales are thriving, a Massachusetts community with a two percent transfer tax would lose 43 cents for every dollar they expect to raise.
The report is available for review at the website, MAHousingsolutions.com which breaks down the findings.