Fall is the season for Boston, Massachusetts real estate developers to petition for large tax reductions. The goal is to turn the office buildings into residences.
Michelle Wu, the mayor of Boston, has suggested the proposed tax incentive in an effort to address the problem of vacant offices in the city during the pandemic and to boost foot traffic, which is crucial for small companies to prosper in urban areas.
The need for affordable housing has increased due to the high rent costs in Boston and other cities like New York City.
How Much Do the Tax Incentives Cost?
The tax break for converting offices to housing for residents comes at a time when the typical rent for an apartment in Boston varies between roughly $3,400 to $3,700 or more, depending on a variety of factors such as the number of bedrooms, facilities, and location.
According to Rent.com, the average monthly rent for an apartment with one bedroom in Boston is $2,500.
And, while rent in Boston remains high, there appears to be a limited supply for demands. According to a RentCafe analysis, Boston will be among the top twenty most competitive rental markets in 2023, with Boston residents competing with an average of 13 other renters for each available property.
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Tax Breaks for Boston Offices
Office-to-residential conversions are complex and costly. Suitable buildings with lower property value and adaptable floor plans can facilitate the process, benefiting Bostonians with a few hundred units in older structures.
Applications for the PLAN Downtown initiative will be accepted beginning this fall. The tax incentives is a 75% decrease in the regular tax rate for up to 29 years for residential units.
A public-private collaboration including “payment in lieu of taxes” agreement would support the program.
Eligible projects must, among other things, meet zoning and other rules including affordable units and conservation of energy, and have to start building by October 2025.
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Source: KIPLINGER