Allows a municipality to set its own conveyance tax rate for residential properties sold in excess of $900,000.00 at $10 per $500. Provides collected taxes to be in a restricted account and distributed within 2 years for affordable housing.
Summary
This bill amends Rhode Island’s real estate conveyance tax law to create an additional local option tax on high-value residential property sales. For residential real estate sold for more than $900,000, a municipality could, by local ordinance, impose an extra conveyance tax of up to $10 per $500 of consideration above that threshold. The bill also preserves the existing state conveyance tax and the separate state tax on transfers that create an “acquired real estate company,” while directing the new local tax proceeds toward housing-related purposes.
The bill requires that revenue from the municipal surtax be placed in restricted accounts and used only for affordable housing within the municipality, serving households at or below 80% of area median income. Municipalities would need to maintain a local affordable housing board, allocate the funds within two years, and reflect the allocation process in their local comprehensive plans where applicable. As an alternative, a municipality could transfer the collections to state housing entities, including the housing resources commission, the Department of Housing, or Rhode Island Housing, for affordable housing development in that community. The bill takes effect upon passage.
Impact
The bill would amend Chapter 44-25 of the General Laws governing the real estate conveyance tax by authorizing municipalities to adopt an additional tax on residential sales above $900,000. It would not change the base state conveyance tax rate, but it would add a new local revenue tool and require special handling of the proceeds through restricted housing accounts or transfers to state housing agencies. The bill also reinforces existing filing and payment requirements for transactions involving acquired real estate companies and leaves the current state distribution structure for those transactions in place.
Sentiment
The available bill materials suggest generally favorable support for the measure as a housing policy tool, with the bill framed as a way to generate dedicated funding for affordable housing. The caption and explanatory language emphasize local flexibility and housing production, indicating a policy goal of directing revenue from luxury or high-end transactions toward community housing needs. No committee transcript or vote record is provided, so there is no recorded opposition or formal vote sentiment in the supplied materials.
Contention
The main policy issue is the balance between raising dedicated affordable housing revenue and imposing an additional tax on higher-priced residential transactions. Potential points of contention include the size of the surtax, the $900,000 threshold, whether municipalities should have discretion to adopt it, and whether the funds should be controlled locally or routed through state housing entities. Another possible issue is administrative complexity, since municipalities would need restricted accounts, oversight boards, and a two-year allocation timeline, while sellers and conveyancers would face an added tax and compliance requirement.
Modifies collective Statewide transfer agreement and reverse transfer agreement; establishes New Jersey Transfer Ombudsperson within Office of Secretary of Higher Education.
Modifies collective statewide transfer agreement and reverse transfer agreement; establishes New Jersey Transfer Ombudsperson within Office of Secretary of Higher Education.