This week you will be receiving a Call for Action from the Massachusetts Association of REALTORS® (MAR) in opposition to transfer taxes. As advocates for homeowners, both current and future, our collective voice and actions can shape policies that significantly impact the communities and people we serve. Transfer taxes, proposed as a means to bolster revenue streams or deter speculative investments, pose a substantial threat not only to our industry's vitality but also to the aspirations of aspiring homeowners and property investors alike. At their core, these taxes impede the fluidity of transactions, erect barriers to entry for first-time buyers, and burden property owners with additional financial strain. We hope that you will share your voice to oppose a new proposed transfer tax in Massachusetts. Below are "Transfer Tax Facts" from MAR to help you learn about transfer taxes and why we are opposing this legislation.

TRANSFER TAX FACTS

What are transfer taxes?

Transfer taxes are a tax on the sale of real estate. While there are about a dozen proposals before the legislature, this one that has receive the most attention of late was included in the Affordable Homes Act. It would allow municipalities the option of adopting a tax between 0.5% and 2% that would apply to the amount of sale price above the higher of one million dollars or the county median (currently, only Nantucket and Dukes have county medians over $1 million). The bill requires sellers to pay the tax.

Why do we care?

Transfer taxes are bad tax policy that would hard the real estate market. A wealth of academic research on transfer taxes has demonstrated the following impacts: 

• The market dictates who pays the tax, but either way someone loses. In a hot market, the tax is passed along to buyers in the form of higher home prices, increasing the cost of housing. In a cool market, costs are borne by the seller, decreasing home values (and thus municipal property tax revenues), stripping sellers of equity.
• Since the tax can be avoided, home buyers and sellers take steps to avoid paying it, or avoid paying it as often as they would if the tax didn't exist. As a result, seniors wait longer to downsize and young people (who are likely to pay the tax multiple times over their housing journeys) and growing families wait longer to purchase. This reduces housing inventory, by some estimate each 1% tax causes a 7 - 15% reduction in inventory. That's bad for the housing market, business, and the state which is already facing a massive inventory shortfall.
• Chilling the market in this way hurts socioeconomic mobility and the ability for residents to build equity and move into homes that best fit their wants and needs.
• It also can be wielded as an exclusionary tool by municipalities that have spent decades pursuing exclusionary zoning policies and preventing development. Adding this tax raises the cost of entry for many. It can also decrease the likelihood of further housing development by eating into potential investor profits.

Why are we taking action on transfer taxes now?

We have successfully opposed transfer taxes for more than 30 years. Momentum for these taxes has grown somewhat over the last few years, but most notable changes have been the Governor proposing a transfer tax in her housing bond bill at the start of the year and the House Speaker and Ways and Means Chair providing recent quotes expressing interest in transfer taxes. We anticipate that the House may take action on this issue as early as May, so it is essential that we demonstrate significant opposition ASAP.

For questions, concerns, or if you're interested in convening members for a transfer tax discussion, please contact Justin Davidson, MAR General Counsel & Director of Government Affairs.