Subjects residential properties which are a part of certain federal programs to a 12% tax of the prior year's rental income.
Impact
By raising the tax rate applicable to certain supported housing properties, the bill aims to create a more uniform taxation policy that aligns state law with federal financing obligations. This could potentially create an increased revenue stream for local governments, allowing for enhanced investments in community services and infrastructure tailored towards the housing of low-income residents. However, the bill's effective taxation structure is contingent upon the operational conditions of the properties, which could lead to variability in tax collections based on compliance with federal requisites.
Summary
House Bill 5236 proposes amendments to the taxation framework concerning residential properties involved in specific federal housing programs. Effective January 1, 2026, this bill stipulates that properties participating in the Section 202 Supportive Housing for the Elderly Program, Section 811 Supporting Housing for Persons with Disabilities Programs, or project-based Section 8 housing will be assessed a tax rate of up to twelve percent of the previous year's gross scheduled rental income, provided these properties operate on a cost-based reimbursement system. This change aims to ensure significant funding structures for low-income housing aligned with federal assistance programs.
Contention
While supporters of the bill may argue that the increase in taxation is necessary to meet the financial demands of maintaining affordable housing initiatives, critics might raise concerns about the potential impact on landlords and property managers who may be required to absorb the increased costs. This could lead to higher rents in the market, thereby counteracting the intentions of affordable housing programs. Additionally, discussions may arise regarding the implications for tenants living within these properties as cost increases could eventually be passed down, resulting in affordability issues within these supportive housing units.
Provides that only residential properties and new or rehabilitated residential affordable housing units would be subject to the tax under § 44-5-13.1 relating to taxation of low-income housing.
Provides that only residential properties and new or rehabilitated residential affordable housing units would be subject to the tax under § 44-5-13.1 relating to taxation of low-income housing.
Provides that the city of Woonsocket not be required to accept additional residential properties subject to the alternative tax assessment due to its stock of affordable housing meeting the 10% housing requirement.
Includes non-owner-occupied residential properties used for short-term rentals for tourist or transient use to be assessed as Class 2 properties on or after the assessment date of December 31, 2024.
Requires landlords to conduct a radon test of all residential rental properties every five (5) years. Short-term residential rentals would be excluded from radon testing requirements.