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 accepted a $14 billion fiscal 12 months 2026 finances, which now awaits Gov. Dan McKee’s signature. Included within the proposed finances is a 63% enhance in a conveyance tax for all residence sellers, and a brand new tax on properties appraised at $1 million or extra that are unoccupied for greater than 183 days per 12 months.
The pending tax on pricier properties has been dubbed the “Taylor Swift tax” because the singer might owe $136,000 in new taxes on her Rhode Island shoreline mansion, in accordance with the Providence Journal. The Rhode Island Association of Realtors and the Rhode Island Mortgage Bankers Association 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 possible exacerbate it,” mentioned Travis McDermott, an lawyer 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 new tax would up that to $7.50 per $1,000.
A “Tier 2” tax on properties promoting over $800,000 would additionally rise. Instead 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 an extra $5 per $1,000 of assessed worth on properties valued at $1 million or extra that are not major residences. The modifications would go into impact July 2026.
How the taxes might influence the housing market
The nation’s smallest state has a aggressive housing market, with a median worth of $512,750 in May, in accordance with the Rhode Island Association of Realtors. While residence costs in among the nation’s largest and fastest-moving markets are stalling or starting to say no, Ocean State residence costs have risen nearly $50,000 for the reason that starting of 2025, the commerce group mentioned.
The state can be final within the nation in residential development since 2020, and noticed properties constructed on the slowest tempo within the U.S. final 12 months, the Providence Journal reported. Those assessments final month additionally got here forward of what may very well be disruptive impacts to residence constructing by tariffs.
The looming conveyance tax enhance might add hundreds of {dollars} to a house vendor’s invoice, native actual property commerce teams warned. A home-owner offloading a $500,000 property might see their conveyance tax bounce from $2,300 to $3,750. Lower-priced properties might see extra modest tax will increase of some hundred {dollars}, however $200,000 properties in Rhode Island are few and much between, McDermott defined.
“Whether the vendor tries to barter that away by not making concessions, or begins at a better asking worth, both means would additional prohibit the liquid marketplace for actual property,” he mentioned.
The Taylor Swift tax in the meantime might supercharge annual tax payments, and is already discouraging consumers who have been weighing Rhode Island properties towards Connecticut and Massachusetts properties, mentioned Chris Whitten, president of the RIAR and founding father of Premeer Real Estate.
Rhode Island House Speaker Ok. Joseph Shekarchi, a Democrat, mentioned there was no estimate for the income the holiday residence tax would generate, and the proceeds would funnel into the state’s Low Income Housing Tax Credit program, in accordance with the Rhode Island Current.
Shekarchi, in emailed feedback Monday night, mentioned lawmakers needed to discover further revenues to put money into major care and Medicaid. Regarding the Taylor Swift tax, the House Speaker mentioned he felt it was extra equitable to extend the prices on the pricier properties than tax working households.
On the conveyance tax enhance, the lawmaker highlighted the Tier 2 tax and famous it is a one-time charge. “I don’t imagine a charge of some thousand {dollars} shall be a considerably detrimental issue within the buy of one million greenback residence,” mentioned Shekarchi.
Trade teams mentioned they don’t have any method to block the taxes in the event that they’re signed into regulation, however mentioned they’re going to foyer for amendments within the subsequent finances invoice.
“They’re balancing the finances on the backs of householders in Rhode Island,” Whitten mentioned. “The final 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.”
