Transfer fee won’t make attainable housing more expensive


Massachusetts Gov. Maura Healey’s administration yesterday finally announced a significant housing bond bill. There’s a lot to it, what the administration says is the largest investment in housing by a governor to date. 

Perhaps most significant to the Island is the option for towns to create a real estate transfer fee, a small tax on expensive property sales. The proposal still needs legislative approval, but it’s a massive step in the right direction. Former Gov. Charlie Baker had been opposed to a transfer fee, at least at the time, and any lawmaker approval of a transfer fee likely would have been vetoed.

The fee would be a boon for efforts on the Island to help year-round residents, and we know there is broad support for it. Voters at all Island town meetings have endorsed it.

The option to impose a fee has been gaining momentum over the past couple of years. Cape and Islands towns have long advocated for the option, but support from cities like Somerville, Boston, and Cambridge has given it a fighting chance. 

On a local level, the tax is expected to bring millions of dollars in funding to the Island that could be put toward building actual, year-round, affordable housing; and it isn’t just about building more. Towns can use the money for deed restrictions that preserve existing homes at reasonable prices for year-rounders. 

Right now, the demand for housing on the Island way outstrips the supply. There’s been a dramatic drop in available homes since the pandemic boom began. And the low supply is jacking up costs. The transfer fee could collect revenue to buy land, to build developments, which will decrease that demand, and ultimately lead to more competitive prices for Islanders.

But one of the loudest voices against the transfer fee has, sadly, been the real estate lobby. The Massachusetts Association of Realtors — which has some 30,000 members — has urged the legislature to reject the idea. Together with the Greater Boston Real Estate Board, with its 13,000 members, the association penned a letter to lawmakers saying the transfer fee will only worsen the state’s housing crisis. Most recently, an association representative urged lawmakers to vote against it during a hearing this past week.

The association argues that the transfer fee would be passed on to buyers, and make purchasing a home even more difficult. They also argue that a transfer fee would violate principles of tax fairness, “discriminating against the 2.5 percent of people in the state who buy or sell a home annually.”

Perhaps their most egregious argument is that a transfer fee in wealthier communities would make them even more expensive and exclusive, as if Martha’s Vineyard housing would become even harder to attain.

We argue that just the opposite would happen. The transfer fee is a tax on the seller. And not just on any seller, but high-end real estate sellers. For the Vineyard, housing advocates are pushing for a transfer fee on properties that go for more than a million dollars, and only the portion of a sale after $1 million would be taxed, at 2 percent. In other words, $20,000 would be taxed on a home that sells for $2 million. 

Twenty thousand dollars is a ton of money for someone living paycheck to paycheck. But for someone who is selling their second home — or third home — for $2 million, we don’t have much sympathy for a loss of $20,000. We think they’ll be OK.

It’s disingenuous to say that housing prices will only increase with the passage of a transfer tax. It makes more sense to think about the fee as a tax on the wealthy that helps the local economy. 

We’ll capitulate a little with the real estate lobby. The passage of a state bill would allow localities to set their own threshold to initiate the fee. If there is a fear that year-round residents and their efforts to buy a home could be made more difficult with a transfer fee, then raise the threshold. The median home sale on the Island is $1.4 million. Island towns could boost the threshold for the fee to, say, $2 million. They would still likely produce a significant amount of funding.

But ultimately, as voiced by State Sen. Julian Cyr at a recent legislative hearing, our communities are eroding. Year-round residents are getting forced from the Island; municipalities on the Vineyard, while looking at Nantucket as a bit of a crystal ball, are worried about having enough staff, and are considering building housing for their employees.

There’s been no other funding source identified that is significant enough to address the housing crisis. The transfer fee represents a sizable amount of funding to at least preserve some housing for year-round residents.

The governor has said she is for it. The people have said they are for it. Let’s get it done.


  1. Your argument that this fee will not increase the price of homes is sophomoric. Buyers may not write the check but they always pay for all of the sellers closing costs. So now most buyers will have to fork up enough money to cover the sellers’ brokers commission, the land bank fee and now this new fee. Typical “feel good” liberal policy that as always hurts those they pretend to help.

  2. Any kind of fee, regardless of who pays it,
    increases the price of housing.
    However, it’s a no brainer that if that fee
    comes for wealthy people and the money
    is used for affordable housing, we will have
    a more equitable community.
    Yup— “Tax the rich, feed the poor until
    there are no rich no more” …
    That song was released 52 years ago.
    And wealth inequity has only gotten worse.
    Call me a communist, if you will, but
    I don’t believe a “master class” is the best thing
    for our civilization.
    And as far as I can tell, Jesus and I agree on that one.

  3. Of course an extra tax on home sales will make open-market homes more expensive. Also the new housing bank will be in direct competition with home buyers for lower end homes on the open market. What the housing bank offers will not be limted exclusively to year-rounders.
    According to the census data, the year-round population of Martha’s Vineyard has grown by 24 per cent in the past 10 years, from 16,535 in 2010 to 20,600 in 2020. Somehow, all these people were able to find housing notwithstanding the so-called “housing crisis.” Not everyone can afford to live in an expensive resort community. That’s not a crisis, and it’s not a problem that can be solved by creating more housing.
    If you build it, they will come. The last thing the Vineyard needs is a new tax so that we can artificially increase population growth beyond environmentally sustainable levels. We need to protect our environment from overpopulation. Keep Our Island Green

Comments are closed.