The City of Somerville estimates that a 2% real estate transfer fee — with 1% paid by sellers and 1% paid by buyers, and that exempts owner-occupants (defined as persons residing in the property for at least two years) — could generate up to $6 million per year for affordable housing. The hotter the market, and the greater the number of property transactions, the more such a fee would generate.
Other municipalities are also looking at this legislation but need “home rule” permission, one municipality at a time, from the state to enact it locally. Or, alternatively, legislation could be passed at the state level to allow all municipalities to opt into such a program and design their own terms. This would be much like the well regarded Community Preservation Act (CPA) program that provides funds for local governments to do historic preservation, conservation, etc.
This memorandum from the City of Somerville to the legislature provides a great deal of information on the history, background and justification for such legislation.
House bill 1769, filed January, 2019, is an “Act supporting affordable housing with a local option for a fee to be applied to certain real estate transactions“.
KK: This article suggests Arlington may be likely to pass a real estate transfer tax: https://www.counterpunch.org/2019/12/19/boston-one-step-closer-to-a-luxury-real-estate-transfer-tax/