Why Barnstable County’s 2% Real Estate Transfer Tax Must Be Defeated

Why Barnstable County’s 2% Real Estate Transfer Tax Must Be Defeated By Ronald Beaty

The Barnstable County Assembly of Delegates’ proposed 2% real estate transfer fee on property sales over $2 million, aimed at funding affordable housing, is a well-intentioned but deeply flawed idea that risks harming Cape Cod’s economy and residents. While the region’s housing crisis, declared in April 2025, demands action, this luxury tax is a misguided solution that could chill the real estate market, unfairly burden sellers, and fail to deliver promised results. For the sake of Cape Cod’s economic vitality and fairness, this proposal must be rejected in favor of more equitable, effective strategies.

First, the tax threatens Cape Cod’s real estate market, a cornerstone of the region’s economy. The Cape’s allure as a vacation and second-home destination drives significant economic activity, supporting jobs in construction, hospitality, and small businesses. In 2024, Barnstable County’s luxury market (sales over $2 million) accounted for hundreds of transactions, contributing millions in existing deed excise taxes ($6.48 per $1,000, already the state’s highest). Adding a 2% surcharge, $60,000 on a $3 million sale—m, could deter high-end buyers, reducing sales volume. Evidence from other regions, like Connecticut’s 2.25% “mansion tax” on sales over $2.5 million, shows a measurable slowdown in luxury transactions, with a 10-15% drop in high-end sales in some markets post-implementation. Fewer sales mean less revenue for local businesses and fewer jobs for the very workers the tax aims to help. Cape Cod’s tourism-driven economy cannot afford this risk.

Second, the tax is inherently unfair, targeting a narrow group, luxury property sellers—while sparing others. Proponents argue it only affects wealthy, often non-resident buyers, but many sellers are longtime Cape residents, including retirees or families selling inherited properties. A $2 million home in towns like Chatham or Wellfleet is increasingly common due to market inflation, not always a “luxury” estate. For a retiree selling a $2.5 million family home to downsize, the $50,000 tax hit is a punitive burden, not a fair redistribution of wealth. Unlike property taxes, which are predictable and spread across all owners, this one-time fee punishes a specific transaction, discouraging mobility. Massachusetts’ tax code already redistributes wealth through progressive income taxes and the existing deed excise tax. Piling on another layer risks double taxation and alienates residents who’ve built equity over decades.

Third, the tax’s revenue, projected at up to $56 million annually, is no silver bullet for the housing crisis. Building affordable housing is costly: a single 50-unit project can exceed $15 million, per regional estimates. At best, the tax might fund a few projects annually, far short of the thousands of units needed. Administrative costs, including managing a proposed Housing Bank, could siphon funds, as seen in other jurisdictions where up to 10% of similar fees cover overhead. Meanwhile, the tax does nothing to address zoning restrictions or NIMBYism, which block housing development across Cape Cod. Towns like Yarmouth and Falmouth have rejected multi-family projects due to local opposition, a problem no amount of tax revenue can fix without political will. Alternative solutions—streamlining permitting, incentivizing private development, or expanding state housing grants—would yield faster, broader impact without market distortion.

Moreover, the tax sets a dangerous precedent. If approved via home rule petition, it could embolden other counties to impose similar fees, fragmenting Massachusetts’ tax landscape and deterring investment statewide. Cape Cod’s high deed excise tax ($6.48 per $1,000) already makes it an outlier; adding a 2% surcharge risks painting the region as hostile to property owners. This could drive wealthy buyers to competing markets like the Hamptons or coastal Maine, where transfer taxes are lower or nonexistent. The ripple effect—fewer sales, lower property values, and reduced tax revenue—could harm all residents, not just the affluent.

Finally, the tax ignores simpler, fairer alternatives. Increasing the state’s Community Preservation Act surcharge, which funds housing and is paid by all property owners, spreads the burden equitably. Public-private partnerships, like those in Rhode Island, have built thousands of affordable units without punitive fees. Federal and state grants, such as Massachusetts’ Housing Choice Initiative, remain underutilized. These options avoid singling out one group while addressing root causes like zoning and supply constraints.

Cape Cod’s housing crisis is real, but the 2% transfer tax is a flawed fix. It risks economic disruption, unfairly targets sellers, and diverts focus from systemic solutions. The Assembly of Delegates should reject this proposal and pursue collaborative, market-friendly strategies that unite residents rather than divide them. Cape Cod’s future depends on smart, equitable action, not a tax that punishes success and risks more harm than good.

Ronald Beaty
West Barnstable, MA 02668

Note: Ronald Beaty is a former Barnstable County Commissioner, and a real estate professional with over 30 years experience.