Fall is the season for real estate developers in Boston, Massachusetts to apply for significant tax breaks. The aim is to convert office buildings into residential housing. Boston Mayor Michelle Wu has proposed this new tax incentive to tackle the issue of empty offices in Boston post-pandemic and to increase foot traffic, which is essential for small businesses in cities to thrive. High rent prices in Boston and other places like New York City have made affordable housing even more crucial.
“One building could potentially create hundreds of new housing units that could include a lot of affordable units,” Mayor Wu told Boston Public Rado hosts during a recent "Ask the Mayor” segment. “Every little bit helps in our housing crisis,” Wu said.
Tax Incentives for Boston Offices
Converting office buildings into residential housing is challenging and expensive. As Wu explained, this is partly because not all buildings are suitable for residential housing conversions. But also, to make the numbers work for all involved, the property value of the building must be low. According to Wu, older buildings with adaptable floor plans could ease the conversion and even a few buildings that contain a couple hundred units could benefit Bostonians.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
- Applications for the program, PLAN Downtown, can be submitted beginning this fall. The tax incentive is a 75% reduction of the standard tax rate for residential units up to 29 years.
- The program would be supported by a public-private partnership involving "payment in lieu of taxes" agreements.
- Among other requirements, eligible projects must meet zoning and other standards involving affordable units and energy efficiency and begin construction by October 2025.
Rent Control in Boston Ma. and Average Rent
The tax incentive to convert offices to residential housing comes as average apartment rent in Boston ranges from around $3,400 to $3,700 or more depending on several factors like the number of bedrooms, amenities, and location. Rent.com reports that a one-bedroom apartment in Boston averages $2,500 a month.
And although rent remains high in Boston, there’s also apparently limited supply for demand. A Rent Cafe report rated Boston among the top 20 most competitive rental markets in 2023, with Bostonians competing with about 13 other renters on average for each available apartment.
Meanwhile, rent control, also known as "rent stabilization," has been a widely discussed topic in Boston. Recently, a proposal by Wu to limit rent increases in the city and offer additional protections for tenants was approved by the Boston City Council. However, the proposal still requires support from the Massachusetts legislature.
Opponents of rent control for Boston have argued that it could disadvantage landlords that rely on rental income (like retirees for example), and renters not covered by proposed rent caps.
-
Stock Market Today: Stocks Skid Into Another Risk-Off TurnThe promise of the AI revolution can't overcome flickering hopes for a "Fed put."
-
With DOGE Making Cuts at National Parks, Can You Still Use Your Senior Pass?If you are a U.S. citizen or permanent resident 62 or older, you can still use your Senior Pass at any and all National Parks in the U.S. Here's what the Senior Pass is and how to use it.
-
Tax-Deductible Home Improvements for Retirement in 2025Retirement Taxes Your aging-in-place plan could benefit from the medical expense tax deduction. But watch out for capital gains and property taxes.
-
New Colorado Tax Credit: What’s the Scoop?State Tax Everything you need to know about the Colorado family affordability tax credit in 2025.
-
Key Family Tax Breaks Are on the GOP Chopping Block This YearTax Credits Several tax breaks, including the Child Tax Credit, may face reforms or be cut entirely as lawmakers seek revenue for Trump’s tax plans.
-
What's Going on With New Jersey Property Tax Programs?Property Tax ANCHOR and ‘Senior Freeze’ just got a refresh, and there’s a new program: Stay NJ. Learn how to save on New Jersey property taxes.
-
Five States With the Largest EITC ChecksEITC Households in these states received a larger Earned Income Tax Credit (EITC) last year.
-
Downsize in Retirement With 2025 Tax Benefits: Three Key StrategiesRetirement Taxes Downsizing retirees may benefit from tax savings, lower utility bills, and freed-up income. But could a new presidency impact your home sale?
-
Gov. Hochul Vows to Deliver $1 Billion in Tax Relief to New YorkersState Tax The proposed tax cuts would benefit New York middle-class families.
-
Maryland Property Tax Assessment: What It Means for YouState Tax Amid a growing deficit, Maryland property values are rising. Here’s more of what to know.
