Rhode Island House Approves Major RI Real Estate Tax Changes in FY2026

• A new annual surcharge applies to second homes valued over $1 million that are not used as a primary residence (less than 183 days/year).
   
• Rate: $2.50 per $500 of assessed value above the first $1 million.
   
• A $3 million second home, for example, would pay an extra ~$10,000 annually.
   
• Aimed at encouraging seasonal property owners to live in or rent out their homes and generating revenue for housing initiatives. 
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• The tax paid when property is sold is being raised:
   
  • From $2.30 to $3.75 per $500 of sale price — a 63% increase.
     
• Applies to all property sales.
   
• Revenue from the conveyance tax will be dedicated to homelessness services and affordable housing.
   

• Funds from both the conveyance tax hike and the non‑owner surcharge will be channeled into:
   
  • Expanding homelessness services
     
  • Creating and supporting affordable housing
     
  • Providing local tax credits for low-income homeowners
     

• Both the surcharge and increased conveyance tax are set to take effect July 2026, giving time for homeowner preparation and necessary legislative steps (like Senate approval and the Governor’s signature). 
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• These measures target wealthy, seasonal homeowners (especially in coastal towns like Newport, Westerly, Watch Hill) and aim to:
   
  • Curb property speculation
     
  • Limit empty houses
     
  • Generate funds to alleviate the state’s housing shortage
     
• Critics argue it could:
   
  • Reduce investment and property values
     
  • Burden longtime homeowners with inherited second homes
     

Measure Applies To Purpose Effective“Taylor Swift Tax” surcharge Non-owner second homes > $1M Discourage vacant properties; fund housingJuly 2026

Conveyance tax increase (to $3.75 per $500) All property sales Raise revenue for homelessness/affordable housing July 2026

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This article is provided by the Real Estate Institute of Rhode Island — the state’s trusted source for real estate education, advocacy, and insight.