Great Barrington may consider tax breaks for property owners who rent out portions of their property at affordable rates year-round.
Correction: This story has been updated to correct the percentage amount on proposed real estate transaction fees.
GREAT BARRINGTON — If town voters agree to it, residents could get a break on their real estate taxes if they choose to offer year-round affordable rentals at a portion of their property.
While it isn’t clear how an affordable housing rental exemption might work in Great Barrington, Provincetown has been doing it since 2004. It provides an example of how to calculate the exemption based on how much square footage of a home or apartment is being rented.
Wellfleet appears to have started these exemptions, as well.
The Select Board’s Housing Subcommittee Chair, Leigh Davis, is proposing the idea for further study and possibly a vote at annual town meeting in May.
She says “gray areas” remain. These include the possibility of tax breaks for people who offer long-term affordable rentals in whole homes when they are not living there.
Also, Provincetown’s example has its limits, Davis notes. That town’s tax rate is lower than Great Barrington’s, and so the loss in revenue isn’t as steep.
“There are a lot of calculations that need to be worked out,” she said.
But the idea, she says, is to give property owners an incentive to rent out affordably. This would create more affordable housing and allow low-income renters options beyond housing complexes.
“It encourages affordable housing within neighborhoods and it’s a ‘scattered sites’ approach,” Davis said.
The subcommittee plans to present the proposal to the Select Board Feb. 13.
The idea comes amid an ongoing shortage of affordable housing in the Berkshires and in Great Barrington in particular, as well as soaring real estate prices.
Davis, who works for an affordable housing nonprofit, Construct Inc., advocated a short-term rental bylaw last year to prevent available housing from being swept up by Airbnb owners.
She also wants the town to consider levying a 0.5 percent to 2 percent fee – possibly to be split by buyers and sellers – on some real estate transactions and to funnel that revenue into the town’s Affordable Housing Trust Fund. She’ll be presenting that at the next subcommittee meeting.
As an example of the affordable housing rental exemption, if someone lives in a duplex and rents out one side and lives in the other – they would have their property taxes cut in half, since the discount is based on square footage.
What could prove tricky is whether the town would lose tax revenue that might have to get picked up elsewhere.
“We have to be careful that if too many people take advantage it will cost the town,” Davis said, noting that she is consulting with the town’s assessor on this. “We’ll have to calculate the potential revenue loss, but the value is more affordable housing at a cost savings.”
In Provincetown, where the current tax rate is $5.98 per $1,000 of a property’s assessed value, the number of units rented in the exemption program has ranged from 46 in 2004 to 132 last year. Great Barrington’s current rate is $14.86 per $1,000.
The jump in Provincetown began in 2015, from 88 units to 113 units – and participation continued to climb.
Last year in Provincetown, tax revenue lost through the exemption on 132 units was $136,715.
That participation produced 132 units in a vacation town with a housing shortage. The reduced rents ranged from $1,522 for a studio, to $1,631 for a one-bedroom apartment to $2,522 for a four-bedroom home.