If your clients are selling a home north of the $1 million mark, they may want to read the fine print twice. Massachusetts is considering a new “mansion tax”—a local-option transfer fee targeting high-end residential sales. While the name sounds exclusive, the impact could reach well beyond lavish estates.

Overview of the Proposed Transfer Fee

The plan would allow cities and towns to impose a real estate transfer fee of 0.5% to 2%, applied only to the portion of a property sale exceeding $1 million or the county’s median home price—whichever is higher. Municipalities could choose whether to adopt it. Proceeds would be earmarked for local affordable housing initiatives.

Legislative Developments

The idea has backing from Governor Maura Healey and major city leaders like Boston Mayor Michelle Wu, who view it as a vital tool in addressing Massachusetts’ growing housing affordability crisis. However, in June 2024, the State Senate removed the transfer fee provision from its version of the broader housing bond bill. Lawmakers expressed interest in evaluating existing tools—such as the Community Preservation Act—before introducing new taxes. As of now, the measure’s fate remains undecided in the House–Senate negotiations.

Economic Considerations

While the fee could raise an estimated $384 million annually for housing programs, researchers from the Wharton School of Business and other institutions caution there may be unintended consequences. Critics argue it could depress high-end home values, slow transaction volume, and ultimately reduce total real estate tax revenue—undermining some of the bill’s goals.

Public Discourse

Supporters argue the measure is narrowly targeted, flexible for local governments, and addresses a pressing need for more affordable housing units. Opponents, including many in the real estate industry, raise concerns about market distortion, added costs for sellers, and negative ripple effects in already sensitive local economies.

While this is still a proposed policy, not law, it’s a live issue. Realtors®, attorneys, and high-end property owners should keep close tabs on legislative updates. If it passes, the transfer fee could change how luxury listings are priced and negotiated—especially in markets where the median home price is already brushing that $1 million mark.