Rhode Island 2025 Regular Session

Rhode Island House Bill H5756 Compare Versions

Only one version of the bill is available at this time.

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5	5	2025 -- H 5756
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7	7	LC001848
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9	9	S T A T E O F R H O D E I S L A N D
10	10	IN GENERAL ASSEMBLY
11	11	JANUARY SESSION, A.D. 2025
12	12	____________
13	13
14	14	A N A C T
15	15	RELATING TO TAXATION -- REAL ESTATE CONVEYANCE TAX
16	16	Introduced By: Representatives McGaw, Boylan, Speakman, Ajello, Tanzi, Fogarty,
17	17	Cotter, Cortvriend, and Spears
18	18	Date Introduced: February 26, 2025
19	19	Referred To: House Finance
20	20
21	21
22	22	It is enacted by the General Assembly as follows:
23	23	SECTION 1. Section 44-25-1 of the General Laws in Chapter 44-25 entitled "Real Estate 1
24	24	Conveyance Tax" is hereby amended to read as follows: 2
25	25	44-25-1. Tax imposed — Payment — Burden. 3
26	26	(a) There is imposed, on each deed, instrument, or writing by which any lands, tenements, 4
27	27	or other realty sold is granted, assigned, transferred, or conveyed, to, or vested in, the purchaser or 5
28	28	purchasers, or any other person or persons, by his, her, or their direction, or on any grant, 6
29	29	assignment, transfer, or conveyance or such vesting, by such persons that has the effect of making 7
30	30	any real estate company an acquired real estate company, when the consideration paid exceeds one 8
31	31	hundred dollars ($100), a tax at the rate of two dollars and thirty cents ($2.30) for each five hundred 9
32	32	dollars ($500), or fractional part of it, that is paid for the purchase of property or the interest in an 10
33	33	acquired real estate company (inclusive of the value of any lien or encumbrance remaining at the 11
34	34	time the sale, grant, assignment, transfer, or conveyance or vesting occurs, or in the case of an 12
35	35	interest in an acquired real estate company, a percentage of the value of such lien or encumbrance 13
36	36	equivalent to the percentage interest in the acquired real estate company being granted, assigned, 14
37	37	transferred, conveyed, or vested). The tax is payable at the time of making, the execution, delivery, 15
38	38	acceptance, or presentation for recording of any instrument affecting such transfer, grant, 16
39	39	assignment, transfer, conveyance, or vesting. In the absence of an agreement to the contrary, the 17
40	40	tax shall be paid by the grantor, assignor, transferor, or person making the conveyance or vesting. 18
41	41	(b) In addition to the tax imposed by subsection (a), there is imposed, on each deed, 19
42	42
43	43
44	44	LC001848 - Page 2 of 6
45	45	instrument, or writing by which any residential real property sold is granted, assigned, transferred, 1
46	46	or conveyed to, or vested in, the purchaser or purchasers, or any other person or persons, by his, 2
47	47	her, or their direction, or on any grant, assignment, transfer, or conveyance or such vesting, by such 3
48	48	persons that has the effect of making any real estate company an acquired real estate company, 4
49	49	when the consideration paid exceeds eight hundred thousand dollars ($800,000), a tax at the rate of 5
50	50	two dollars and thirty cents ($2.30) for each five hundred dollars ($500), or fractional part of it, of 6
51	51	the consideration in excess of eight hundred thousand dollars ($800,000) that is paid for the 7
52	52	purchase of property or the interest in an acquired real estate company (inclusive of the value of 8
53	53	any lien or encumbrance remaining at the time the sale, grant, assignment, transfer, or conveyance 9
54	54	or vesting occurs, or in the case of an interest in an acquired real estate company, a percentage of 10
55	55	the value of such lien or encumbrance equivalent to the percentage interest in the acquired real 11
56	56	estate company being granted, assigned, transferred, conveyed, or vested). The tax imposed by this 12
57	57	subsection shall be paid at the same time and in the same manner as the tax imposed by subsection 13
58	58	(a). 14
59	59	(c) In addition to the taxes imposed by subsections (a) and (b) of this section, upon 15
60	60	enactment of a local ordinance, a municipality may impose, on each deed, instrument, or writing 16
61	61	by which any sold residential real property located in that municipality is granted, assigned, 17
62	62	transferred, or conveyed to, or vested in, the purchaser or purchasers, or any other person or 18
63	63	persons, by his, her, or their direction, or on any grant, assignment, transfer, or conveyance or such 19
64	64	vesting, by such persons that has the effect of making any real estate company an acquired real 20
65	65	estate company, when the consideration paid exceeds nine hundred thousand dollars ($900,000), a 21
66	66	tax of not more than ten dollars ($10.00) for each five hundred dollars ($500), or fractional part of 22
67	67	it, of the consideration in excess of nine hundred thousand dollars ($900,000) that is paid for the 23
68	68	purchase of property or the interest in an acquired real estate company (inclusive of the value of 24
69	69	any lien or encumbrance remaining at the time the sale, grant, assignment, transfer, or conveyance 25
70	70	or vesting occurs, or in the case of an interest in an acquired real estate company, a percentage of 26
71	71	the value of such lien or encumbrance equivalent to the percentage interest in the acquired real 27
72	72	estate company being granted, assigned, transferred, conveyed, or vested). The tax imposed by this 28
73	73	subsection shall be paid at the same time and in the same manner as the tax imposed by subsection 29
74	74	(a) of this section. 30
75	75	(c)(d) In the event no consideration is actually paid for the lands, tenements, or realty, the 31
76	76	instrument or interest in an acquired real estate company of conveyance shall contain a statement 32
77	77	to the effect that the consideration is such that no documentary stamps are required. 33
78	78	(d)(e) The tax shall be distributed as follows: 34
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82	82	(1) With respect to the tax imposed by subsection (a): the tax administrator shall contribute 1
83	83	to the distressed community relief program the sum of thirty cents ($.30) per two dollars and thirty 2
84	84	cents ($2.30) of the face value of the stamps to be distributed pursuant to § 45-13-12, and to the 3
85	85	housing resources and homelessness restricted receipt account established pursuant to § 42-128-2 4
86	86	the sum of thirty cents ($.30) per two dollars and thirty cents ($2.30) of the face value of the stamps. 5
87	87	The state shall retain sixty cents ($.60) for state use. The balance of the tax shall be retained by the 6
88	88	municipality collecting the tax. 7
89	89	(2) With respect to the tax imposed by subsection (b): the tax administrator shall contribute 8
90	90	the entire tax to the housing production fund established pursuant to § 42-128-2.1. 9
91	91	(3) With respect to the tax imposed by subsection (c) of this section, the municipality shall 10
92	92	retain the tax collected and deposit it into restricted accounts, that shall be allocated and spent only 11
93	93	for the creation and development of affordable housing, as defined in § 42-128-8.1, within the 12
94	94	municipality serving individuals or families at or below eighty percent (80%) of the area median 13
95	95	income. The municipality shall maintain a local affordable housing board to oversee the funds in 14
96	96	the restricted accounts and shall allocate the funds within two (2) years. The municipality shall 15
97	97	include in the housing element of their local comprehensive plan, if applicable, the process it will 16
98	98	use to allocate the funds. 17
99	99	(4) As an alternative to the provisions of subsection (e)(3) of this section, the municipality 18
100	100	may elect to transfer tax collections promptly upon receipt or within the two-year (2) period after 19
101	101	receipt to the housing resources commission, the Rhode Island department of housing, or Rhode 20
102	102	Island Housing, for the purpose of developing affordable housing within that community. 21
103	103	(3)(5) Notwithstanding the above, in the case of the tax on the grant, transfer, assignment, 22
104	104	or conveyance or vesting with respect to an acquired real estate company, the tax shall be collected 23
105	105	by the tax administrator and shall be distributed to the municipality where the real estate owned by 24
106	106	the acquired real estate company is located; provided, however, in the case of any such tax collected 25
107	107	by the tax administrator, if the acquired real estate company owns property located in more than 26
108	108	one municipality, the proceeds of the tax shall be allocated amongst said municipalities in the 27
109	109	proportion the assessed value of said real estate in each such municipality bears to the total of the 28
110	110	assessed values of all of the real estate owned by the acquired real estate company in Rhode Island. 29
111	111	Provided, however, in fiscal years 2004 and 2005, from the proceeds of this tax, the tax 30
112	112	administrator shall deposit as general revenues the sum of ninety cents ($.90) per two dollars and 31
113	113	thirty cents ($2.30) of the face value of the stamps. The balance of the tax on the purchase of 32
114	114	property shall be retained by the municipality collecting the tax. The balance of the tax on the 33
115	115	transfer with respect to an acquired real estate company, shall be collected by the tax administrator 34
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119	119	and shall be distributed to the municipality where the property for which interest is sold is 1
120	120	physically located. Provided, however, that in the case of any tax collected by the tax administrator 2
121	121	with respect to an acquired real estate company where the acquired real estate company owns 3
122	122	property located in more than one municipality, the proceeds of the tax shall be allocated amongst 4
123	123	the municipalities in proportion that the assessed value in any such municipality bears to the 5
124	124	assessed values of all of the real estate owned by the acquired real estate company in Rhode Island. 6
125	125	(e)(f) For purposes of this section, the term “acquired real estate company” means a real 7
126	126	estate company that has undergone a change in ownership interest if (1) The change does not affect 8
127	127	the continuity of the operations of the company; and (2) The change, whether alone or together 9
128	128	with prior changes has the effect of granting, transferring, assigning, or conveying or vesting, 10
129	129	transferring directly or indirectly, 50% or more of the total ownership in the company within a 11
130	130	period of three (3) years. For purposes of the foregoing subsection (e)(2), a grant, transfer, 12
131	131	assignment, or conveyance or vesting, shall be deemed to have occurred within a period of three 13
132	132	(3) years of another grant(s), transfer(s), assignment(s), or conveyance(s) or vesting(s) if during the 14
133	133	period the granting, transferring, assigning, or conveying party provides the receiving party a 15
134	134	legally binding document granting, transferring, assigning, or conveying or vesting the realty or a 16
135	135	commitment or option enforceable at a future date to execute the grant, transfer, assignment, or 17
136	136	conveyance or vesting. 18
137	137	(f)(g) A real estate company is a corporation, limited liability company, partnership, or 19
138	138	other legal entity that meets any of the following: 20
139	139	(1) Is primarily engaged in the business of holding, selling, or leasing real estate, where 21
140	140	90% or more of the ownership of the real estate is held by 35 or fewer persons and which company 22
141	141	either (i) derives 60% or more of its annual gross receipts from the ownership or disposition of real 23
142	142	estate; or (ii) owns real estate the value of which comprises 90% or more of the value of the entity’s 24
143	143	entire tangible asset holdings exclusive of tangible assets that are fairly transferrable and actively 25
144	144	traded on an established market; or 26
145	145	(2) Ninety percent or more of the ownership interest in such entity is held by 35 or fewer 27
146	146	persons and the entity owns as 90% or more of the fair market value of its assets a direct or indirect 28
147	147	interest in a real estate company. An indirect ownership interest is an interest in an entity 90% or 29
148	148	more of which is held by 35 or fewer persons and the purpose of the entity is the ownership of a 30
149	149	real estate company. 31
150	150	(g)(h) In the case of a grant, assignment, transfer, or conveyance or vesting that results in 32
151	151	a real estate company becoming an acquired real estate company, the grantor, assignor, transferor, 33
152	152	or person making the conveyance or causing the vesting, shall file or cause to be filed with the 34
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154	154
155	155	LC001848 - Page 5 of 6
156	156	division of taxation, at least five (5) days prior to the grant, transfer, assignment, or conveyance or 1
157	157	vesting, notification of the proposed grant, transfer, assignment, or conveyance or vesting, the price, 2
158	158	terms and conditions thereof, and the character and location of all of the real estate assets held by 3
159	159	the real estate company and shall remit the tax imposed and owed pursuant to subsection (a). Any 4
160	160	such grant, transfer, assignment, or conveyance or vesting which results in a real estate company 5
161	161	becoming an acquired real estate company shall be fraudulent and void as against the state unless 6
162	162	the entity notifies the tax administrator in writing of the grant, transfer, assignment, or conveyance 7
163	163	or vesting as herein required in subsection (g) and has paid the tax as required in subsection (a). 8
164	164	Upon the payment of the tax by the transferor, the tax administrator shall issue a certificate of the 9
165	165	payment of the tax which certificate shall be recordable in the land evidence records in each 10
166	166	municipality in which such real estate company owns real estate. Where the real estate company 11
167	167	has assets other than interests in real estate located in Rhode Island, the tax shall be based upon the 12
168	168	assessed value of each parcel of property located in each municipality in the state of Rhode Island. 13
169	169	SECTION 2. This act shall take effect upon passage. 14
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175	175	LC001848 - Page 6 of 6
176	176	EXPLANATION
177	177	BY THE LEGISLATIVE COUNCIL
178	178	OF
179	179	A N A C T
180	180	RELATING TO TAXATION -- REAL ESTATE CONVEYANCE TAX
181	181	***
182	182	This act would allow a municipality to set an additional conveyance tax rate of not more 1
183	183	than ten dollars ($10.00) for each five hundred dollars ($500), or fractional part of that amount, of 2
184	184	the consideration in excess of nine hundred thousand dollars ($900,000). This act would also 3
185	185	require that the excess conveyance taxes collected alternatively be deposited in a restricted account 4
186	186	and distributed within two (2) years, to be used only for affordable housing for individuals or 5
187	187	families at or below eighty percent (80%) of the area median income or transferred to state housing 6
188	188	agencies for use in the community to develop affordable housing. 7
189	189	This act would take effect upon passage. 8
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191	191	LC001848
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