A new report from a Washington think tank, The Institute for Policy Studies, looked at property records from 12 luxury condo buildings in the Boston and found that 64 percent of the owners in these buildings do not claim a residential tax exemption.
The Institute for Policy Studies says that the lack of residential tax exemption is a good indicator or absentee ownership, assuming that the owners do not deem the tax benefits as negligible.
To cut down on that, the Institute wants the city to levy a tax on high-end real estate transactions over $2.5 million. Mayor Marty Walsh says he plans to look at his policies affecting high-end construction, but isn’t interested in such a tax.
“I don't think we should start taxing at different rates,” Walsh told WGBH News. “I think we need to look and see what's in front of us right now.”
The Institute’s report says the luxury building boom is driving up housing costs in central neighborhoods, which then contributes to higher costs throughout the city but Walsh says he doubts that a recent boom in downtown luxury condos affects housing prices in the rest of the city.
“I'm not sure how much a Millenium tower $20 million condo on top is affecting housing stock in Dorchester. But it's something we have to look at,” he said. “What that report does, it causes us to take a re-look and evaluation to see if we kind of need to re-plan some of the things we're doing in the city.”
Boston City Councilor Lydia Edwards, chair of the Committee on Housing and Community Development, and Chuck Collins, one of the report’s authors were both on “Greater Boston” Tuesday night to discuss the report.
Collins said the boom in luxury housing causes a negative ripple effect, with affluent, but not super-rich Bostonians being priced out of the city core.
"They're moving out into other neighborhoods and that's competing with middle-class households and low-income households who are just trying to stay in the city,” Collins said.
Collins says spot checks also turned up suspicious sales transactions, "Purchasing a $6 million dollar condominium with cash by a Delaware organized limited liability corporation—that's a red flag.”
Delaware is the premier secrecy jurisdiction in the country, Collins says, adding that the city could discourage secret and absentee owners, and could tax luxury condos to fund affordable housing. The Walsh administration said in a statement they will be asking the federal government to look out for possible ties to financial crime by anonymous buyers of luxury housing.
During the segmment with Jim Braude, Edwards said that the city could not build its way out of the affordable housing shortage.
"These units are not actually going to Bostonians," she said, referring to the units in the report.