In an escalating dispute with Harvard University regarding its admissions, hiring, and student discipline policies, President Donald Trump proposed that the IRS revoke Harvard’s tax-exempt status. Such a move would be nearly unprecedented and could jeopardize Harvard’s charitable donations and its substantial $52 billion endowment. However, one of the most significant consequences of changing Harvard’s tax-exempt status could affect the university’s extensive real estate holdings in Boston and Cambridge.
While Harvard does pay some local real estate taxes on its primarily commercial properties, such as storefronts in Harvard Square and the Enterprise Research Campus currently under construction in north Allston, most of its property—dormitories, classrooms, administrative buildings, and athletic facilities—is tax-exempt.
Spanning both sides of the Charles River, Harvard owns or leases nearly 873 acres, with the vast majority exempt from local property taxes. The university’s real estate portfolio includes approximately 500 buildings across its Cambridge, north Allston, and Longwood Medical Area campuses. This includes its undergraduate campus in Harvard Square, the business school campus in Boston’s Allston neighborhood, and the medical and dental school campuses in Longwood. Beyond the medical facilities, Harvard’s holdings in Allston and Cambridge total more than 21 million square feet.
Additionally, Harvard manages the Arnold Arboretum, a 281-acre nature preserve and living museum located in Jamaica Plain. The university originally owned the property when it was established in 1872. In 1882, botanist and initial director Charles Sprague Sargent and landscape architect Frederick Law Olmsted transferred the Arboretum to the city of Boston in exchange for a 1,000-year lease at an annual rate of one dollar. The property’s total assessed value is nearly $116 million, according to an analysis of assessment records by the Globe, though it currently enjoys an exemption from Boston property taxes. If taxed at the prevailing commercial tax rate, the bill for the Arboretum would exceed $3 million.
Harvard’s Enterprise Research Campus in north Allston represents the institution’s first large-scale commercial project and is seen as a response to MIT’s significant commercial presence in Kendall Square. Despite construction on the first phase still being ongoing, sections of the campus have already been added to Boston’s tax rolls, and when fully developed, it aims to be a major contributor to property taxes in the city. The first phase covers 14 acres, comprising 510,000 square feet of lab space developed by Breakthrough Properties, the biotech arm of real estate giant Tishman Speyer, alongside 343 apartments and a conference center named after private equity billionaire and philanthropist David Rubenstein. Construction for this 900,000-square-foot phase began in November 2023 and is expected to be completed next year.
Local governments in Boston and Cambridge require nonprofit universities, hospitals, and museums to contribute voluntary “payment in lieu of taxes” (PILOT) to help offset the city services they consume. In the most recent year for which Boston publicly reported data on its PILOT program, 2023, authorities sought about $14 million from Harvard, which owns properties valued at a combined $1.5 billion on its side of the Charles River, including the John A. Paulson School of Engineering and Applied Sciences complex in Allston and the Harvard T.H. Chan School of Public Health in Longwood Medical Area. For fiscal year 2023, Harvard provided over $11 million in PILOT payments—$4 million in cash and $7 million in credits for diverse community benefits—within Boston and $4.7 million in Cambridge.
The potential implications of Harvard losing its nonprofit status remain uncertain, yet every major research institution in the United States is closely monitoring the situation. George W. “Mac” McCarthy, president and CEO of the Lincoln Institute of Land Policy in Cambridge, dismissed the notion of the IRS suspending Harvard’s nonprofit status as “laughable.” He emphasized that numerous obstacles exist that could hinder such an effort, stating that the people managing Harvard’s endowment and university operations are highly sophisticated and adept at navigating IRS regulations to maintain their 501(c)(3) status.
Unlike federal income tax deductions, property taxes are governed by local governments under state laws. Consequently, it remains unclear how a federal decision would influence taxation practices in Massachusetts or how cities like Boston and Cambridge might choose to tax Harvard should the opportunity arise. However, McCarthy warned that any threat to Harvard’s nonprofit status would likely spur vigorous legal battles.
“There’s way too much at stake there to let it go,” he concluded.
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