Rhode Island City Council Opposes Conveyance Tax on High-End Homes

News Summary

The Newport City Council has voiced its opposition to proposed legislation allowing municipalities to impose a conveyance tax on high-end home sales exceeding $900,000. This tax aims to fund affordable housing projects but raises concerns about its potential impact on the local real estate market, where properties have high median values. Residents fear it could add significant financial burdens, especially as a substantial percentage of local homes exceed the threshold. The council, while recognizing the need for affordable housing, stands firmly against these additional taxes.

Rhode Island City Council Opposes Proposed Conveyance Tax for High-End Home Sales

In Rhode Island, the Newport City Council has officially opposed two proposed legislative bills, Senate Bill 0037 and House Bill 5756, which would permit municipalities to levy an extra conveyance tax on high-end home sales. The proposed tax specifically targets properties sold for more than $900,000, imposing an additional fee of $10 for every $500 above that threshold. This measure, while aimed at generating funds for affordable housing initiatives, has raised serious concerns among Newport city officials.

The proposed tax could significantly impact Newport’s real estate market, where the median home listing price stands around $1.3 million. Under the new tax structure, a typical home sale could lead to an additional tax burden of approximately $8,000. This has left the Newport City Council apprehensive about the financial implications for homeowners in a market where nearly 38% of properties are already valued over the $900,000 threshold, marking an 18% increase in such homes over the past year.

Under the proposed legislation, funds generated from the additional conveyance tax would be earmarked solely for affordable housing projects at both local and state levels. However, the Newport City Council has expressed frustration with the restrictions on how revenue could be utilized. The tax revenue must either be spent on affordable housing initiatives within two years or be transferred into the state’s affordable housing budget.

Despite Newport exceeding the state’s requirement of maintaining 10% of its housing stock as affordable—achieving 15.6%—the city is still facing challenges. Critics highlight that many local workers in Newport earn less than the area median income, making it difficult for them to afford housing within the city. The state defines affordable housing as 80% of the area median income (AMI), calculated at about $72,900 for Newport, while the average worker income hovers around $55,098.

Additional Proposals and Context

While the Newport City Council has taken a stand against the proposed high-end home sales tax, Governor Dan McKee has introduced a separate idea for a mandatory statewide conveyance tax on home sales priced over $800,000. This plan suggests an increment of $1.65 for every $500 above the $800,000 cutoff, aimed at addressing Rhode Island’s worsening homelessness crisis. Should the governor’s proposal pass, Newport could see an additional $1,650 tax on the median home sale.

The Newport City Council argues that the implementation of both proposed taxes could stifle the housing market and disproportionately affect many residents and potential buyers in the area. The council has unanimously declared their opposition, stating that while the goals of increasing affordable housing are commendable, the financial implications of the proposed tax could outweigh the benefits. The members believe that Newport is already contributing sufficiently to affordable housing initiatives, thereby opposing any additional burdens on homeowners.

Conclusion

The future of the proposed conveyance tax on high-end home sales in Rhode Island remains uncertain, as discussions continue both in the community and within the state legislature. Newport’s firm stance against the measure reflects broader concerns about housing affordability and the economic health of the real estate market in one of the state’s most affluent cities. The outcome of these legislative proposals could have lasting implications for the housing landscape in Rhode Island.

Deeper Dive: News & Info About This Topic

• Newport RI Opinion: Proposed Tax on Top 1%
• What’s Up Newport: Homeowners’ Tax Savings
• Realtor.com: Newport’s Stance on Housing Tax
• Providence Journal: No Tax on Overtime
• Newport Buzz: Two-Tiered Property Tax Program
• Wikipedia: Property Tax
• Google Search: Rhode Island Housing
• Google Scholar: Affordable Housing Tax
• Encyclopedia Britannica: Housing
• Google News: Newport Property Tax