Maine’s pool of money from taxes collected when homes change hands is growing, state projections show, and lawmakers are now arguing over how to use it. The real estate transfer tax is expected to generate tens of millions of dollars more in the late 2020s than it did in recent years, driven in part by higher home prices and by changes to the “mansion tax” rules for properties sold above $1 million. Most of the revenue goes to a patchwork of affordable housing efforts, but the Legislature is considering whether to expand the list of eligible initiatives to include funding for homeless shelters—an issue that has also exposed disagreements about which level of government should shoulder the burden.
The transfer tax collects money from both buyers and sellers each time a property is sold in Maine. The standard rate is $2.20 per $500 in property value, and state materials describe how that translates to a typical sale price. For instance, the Maine Revenue Service calculates that a $395,000 home would incur a $1,738 tax under the standard formula. For higher-value transactions, however, lawmakers have tightened the pricing rules over time as they try to support specific housing programs.
The central change lawmakers made applies to properties worth more than $1 million sold after Nov. 1, 2025. Those deals now incur the standard rate for the first $1 million, then $6 for every $500 in value above that. The tax is sometimes called a “mansion tax” because it is intended to raise money from buyers of more expensive homes. Under the new rules described by Maine’s revenue authorities, a $3 million house would generate about $28,000 in taxes, compared with about $13,000 under the previous requirements.
In state projections cited by the Associated Press, the revenue forecasts show the transfer tax trending upward as the median price of homes in Maine rises. The projected total for this year is $57.4 million, with projections reaching as much as $68.6 million by 2029, up from $51.9 million in 2025. The totals referenced in the reporting do not include the roughly 10% kept by counties that collect the tax and record deeds, a detail that matters in debates about which entities will be asked to fund shelters.
Supporters of the higher “mansion tax” rate say the additional revenue is meant to address affordability gaps in Maine’s housing market. Greg Payne, Gov. Janet Mills’ senior housing policy advisor, linked support for the increase to what he described as a luxury market expanding enough to distort the state’s housing prices. He said that “many Maine families continue to rent because they can’t afford to buy a home,” and that they “also face extraordinary price pressures in the rental market,” adding that raising the tax was one way the state created a first dedicated revenue source for affordable housing production. Payne said the increased tax rate is expected to generate $17 million for Maine’s affordable housing fund in its first year.
Other analysts emphasized that the tax is an approach to funding that can be politically easier than raising property taxes for everyone, but also potentially creates uneven burdens for people who are moving. Jared Walczak, a fellow at the right-leaning Tax Foundation think tank, said the appeal is that officials can describe higher revenue as coming from additional charges on buyers and sellers, rather than broad-based tax increases. Walczak also argued that transfer taxes penalize new buyers and movers by adding a fee to already expensive housing, and he said in Maine that can discourage movement or make purchases harder for less wealthy homebuyers.
Maine’s lawmakers have expanded what the transfer tax can pay for as revenues trended upward, but critics say the tax may not be stable enough to serve as the sole funding base. A land-use think tank analyst, Ron Rakow of the Lincoln Institute of Land Policy, said the transfer tax “only falls on a small group of taxpayers, those who are buying and selling properties,” and he said revenues can fluctuate with the housing market. When markets slow, transfer-tax revenue can drop, and Rakow pointed to the 2009 housing downturn, when revenue declined and the Legislature directed most of the dollars to Maine’s general fund rather than housing-specific purposes.
To reduce the impact of downturns, lawmakers have sometimes redirected transfer-tax receipts toward foreclosure prevention. In the early part of the last decade, when the mortgage crisis drove foreclosures, lawmakers imposed a transfer tax on foreclosed properties and dedicated proceeds to foreclosure prevention efforts administered by the state’s consumer credit protection bureau. Reporting cited projections for that foreclosed-property tax for the current year, including a figure of $80,191 projected for this year.
The current debate over shelters has unfolded as lawmakers try to decide how to allocate an expanding revenue pool while acknowledging future risk if housing sales slow. A bill that advanced out of the Housing and Economic Development Committee would have used money from the increased transfer tax—money that would otherwise go to county governments—to support homeless shelters. The reporting said the proposal came after some shelters closed in 2025 due to insufficient funding, including a youth shelter in Mars Hill and a long-running program in York County.
Shelter advocates and the governor’s office supported the idea of using the transfer-tax expansion to make counties contribute more to shelters. According to Payne, counties contribute $68,000 in total to shelters each year, compared with $7 million from the state. But the plan met opposition from county administrators and municipal groups, who argued it could become a future target for raids under different political leadership and questioned why counties should bear more of the shelter burden. Jean-Marie Caterina, a Cumberland County commissioner and co-chair of the Maine County Commissioners Association’s legislative policy committee, said it was “fabulous to increase money for the homeless,” but questioned why the “mansion tax” should be increased for the state’s portion by hitting counties.
The question of who should fund shelters played out in a March 3 work session, where some lawmakers argued the state should take a more direct role rather than shifting funds away from housing initiatives or counties. Sen. Richard Bennett, an Oxford Republican, said counties were “at the very end of the line in terms of their ability to control what they’re doing,” according to the reporting, adding that they are “getting pressured because the real line of contribution is from the property tax.” Bennett said lawmakers should take money from the general fund rather than other housing initiatives or from counties.
As the bill moved forward, it was amended to take 2% from the newly created Housing Production Fund—programming intended to support housing projects eligible for federal low-income housing tax credits—and to use that amount for shelters instead. Four Republicans and Bennett voted against the shelter amendment, and the reporting said the alternative amendment would have taken the money from the general fund. That proposal has been engrossed by the Maine House of Representatives and Senate, but was awaiting further action in both chambers.
Supporters and committee members acknowledged the trade-offs while describing the compromise as a way to preserve the longer-term affordable housing production pipeline. Rep. Traci Gere, the committee’s co-chair, said lawmakers were “moving chairs around the deck,” referring to the choice between taking 2% from the Housing Production Fund—funding that she described as helping produce affordable housing in counties—and redirecting it toward shelter access for people in vulnerable situations. Gere said she wanted clarity about “what we’re taking from, and what we’re moving things to,” as lawmakers continued to weigh how to prioritize the state’s limited housing dollars.
Some analysts and housing policy researchers said the underlying question for Maine is how much shelter funding should be treated as part of the same transfer-tax-backed pipeline as other affordability programs. Maura Pillsbury, a tax policy analyst for the Maine Center for Economic Policy, said the higher tax on homes over $1 million would likely raise revenue by targeting buyers who can afford the added cost. Yet she and others also emphasized that while the transfer tax can be a viable funding mechanism, it can be volatile as housing sales and prices change—leaving lawmakers with a recurring challenge: deciding which needs to prioritize when the money depends on the pace of the property market.