Rhode Island actual property professionals are criticizing two new taxes that can enhance prices for Ocean State owners, together with a levy dubbed the “Taylor Swift tax.”
State lawmakers final week authorised a $14 billion fiscal yr 2026 funds, which now awaits Gov. Dan McKee’s signature. Included within the proposed funds is a 63% enhance in a conveyance tax for all residence sellers, and a brand new tax on houses appraised at $1 million or extra that are unoccupied for greater than 183 days per yr.
The pending tax on pricier houses has been dubbed the “Taylor Swift tax” because the singer may owe $136,000 in new taxes on her Rhode Island shoreline mansion, in line with the Windfall Journal. The Rhode Island Affiliation of Realtors and the Rhode Island Mortgage Bankers Affiliation have criticized the invoice affecting the state’s small and costly housing market.
“These aren’t supposed to extend the essential housing scarcity and can seemingly exacerbate it,” stated Travis McDermott, an legal professional and board member of the RIMBA.
What are the taxes?
The present conveyance tax in Rhode Island for sellers assess $4.60 per each $1,000 of a house’s worth. The brand new tax would up that to $7.50 per $1,000.
A “Tier 2” tax on properties promoting over $800,000 would additionally rise. As an alternative of sellers paying $4.60 per $1,000 of worth above $800,000, they’d be taxed $7.50 per $1,000 over that restrict.
The “Taylor Swift tax” in the meantime would cost owners a further $5 per $1,000 of assessed worth on houses valued at $1 million or extra that are not major residences. The modifications would go into impact July 2026.
How the taxes may affect the housing market
The nation’s smallest state has a aggressive housing market, with a median value of $512,750 in Could, in line with the Rhode Island Affiliation of Realtors. Whereas residence costs in a number of the nation’s largest and fastest-moving markets are stalling or starting to say no, Ocean State residence costs have risen nearly $50,000 because the starting of 2025, the commerce group stated.
The state can be final within the nation in residential building since 2020, and noticed houses constructed on the slowest tempo within the U.S. final yr, the Windfall Journal reported. These assessments final month additionally got here forward of what could possibly be disruptive impacts to residence constructing by tariffs.
The looming conveyance tax enhance may add 1000’s of {dollars} to a house vendor’s invoice, native actual property commerce teams warned. A house owner offloading a $500,000 property may see their conveyance tax leap from $2,300 to $3,750. Decrease-priced houses may see extra modest tax will increase of some hundred {dollars}, however $200,000 houses in Rhode Island are few and much between, McDermott defined.
“Whether or not the vendor tries to barter that away by not making concessions, or begins at the next asking value, both manner would additional limit the liquid marketplace for actual property,” he stated.
The Taylor Swift tax in the meantime may supercharge annual tax payments, and is already discouraging consumers who have been weighing Rhode Island properties in opposition to Connecticut and Massachusetts houses, stated Chris Whitten, president of the RIAR and founding father of Premeer Actual Property.
Rhode Island Home Speaker Okay. Joseph Shekarchi, a Democrat, stated there was no estimate for the income the holiday residence tax would generate, and the proceeds would funnel into the state’s Low Revenue Housing Tax Credit score program, in line with the Rhode Island Present.
Shekarchi, in emailed feedback Monday night, stated lawmakers needed to discover extra revenues to put money into major care and Medicaid. Concerning the Taylor Swift tax, the Home Speaker stated he felt it was extra equitable to extend the prices on the pricier houses than tax working households.
On the conveyance tax enhance, the lawmaker highlighted the Tier 2 tax and famous it is a one-time price. “I don’t consider a price of some thousand {dollars} shall be a considerably detrimental issue within the buy of one million greenback residence,” stated Shekarchi.
Commerce teams stated they haven’t any option to block the taxes in the event that they’re signed into legislation, however stated they will foyer for amendments within the subsequent funds invoice.
“They’re balancing the funds on the backs of house owners in Rhode Island,” Whitten stated. “The very last thing we have to do is give them one more reason to not promote, as a result of we’ve such tight stock in Rhode Island.”
