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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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.
-
Are COVID Shots Still Covered By Medicare?Getting the new COVID-19 vaccine covered by Medicare isn't as easy this year as it was in the past. Here's what you need to know before you take a trip to your pharmacy.
-
How Digital Platforms Are Changing the Way You Invest in GoldInvesting in gold is easier than ever thanks to digital platforms. Learn how online tools are lowering costs, increasing transparency and making gold accessible to all investors.
-
Standard Deduction 2025 Quiz: How Much Do You Really Know?Quiz Test your knowledge of IRS rules that impact how much money you keep in your wallet.
-
New Bill Would End Taxes on Social Security Benefits in 2026: What Retirees Should KnowTax Law Congress could look to high earners to help offset lost revenue and possibly shore up the Social Security program.
-
New $6,000 'Senior Bonus' Deduction: What It Means for Taxpayers Age 65-PlusTax Changes If you’re an older adult, a new bonus tax deduction could provide a valuable tax benefit. Here's how it works.
-
Claiming the Standard Deduction? Here Are 10 Tax Breaks For Middle-Class Families in 2025Tax Breaks Working middle-income Americans won’t need to itemize to claim these tax deductions and credits — if you qualify.
-
Over Age 65? New $6,000 'Senior Bonus' Deduction Is Available Even If You ItemizeTax Changes If you’re an older adult, a new bonus tax deduction could provide a valuable tax benefit. Here's how it works.
-
New Trump Tax Bill: Five Changes Homeowners Need to Know NowTax Changes Trump’s new tax legislation is reshaping how tax breaks for homeowners work.
-
How the 2025 Child Tax Credit Rules Impact Single ParentsTax Credits New changes to family tax credits, like the Child Tax Credit, will impact the eligibility of some households.
-
How Your 2025 Wedding Could Save You Money on TaxesTax Breaks There are some wedding expenses that are tax-deductible, and you don’t want to miss out on savings.
