Rhode Island 2025 Regular Session

Rhode Island House Bill H6257 Compare Versions

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

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5	5	2025 -- H 6257
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7	7	LC002754
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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: Representative Arthur Handy
17	17	Date Introduced: April 23, 2025
18	18	Referred To: House Finance
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20	20
21	21	It is enacted by the General Assembly as follows:
22	22	SECTION 1. Section 44-25-1 of the General Laws in Chapter 44-25 entitled "Real Estate 1
23	23	Conveyance Tax" is hereby amended to read as follows: 2
24	24	44-25-1. Tax imposed — Payment — Burden. 3
25	25	(a) There is imposed, on each deed, instrument, or writing by which any lands, tenements, 4
26	26	or other realty sold is granted, assigned, transferred, or conveyed, to, or vested in, the purchaser or 5
27	27	purchasers, or any other person or persons, by his, her, or their direction, or on any grant, 6
28	28	assignment, transfer, or conveyance or such vesting, by such persons that has the effect of making 7
29	29	any real estate company an acquired real estate company, when the consideration paid exceeds one 8
30	30	hundred dollars ($100), a tax at the rate of two dollars and thirty cents ($2.30) for each five hundred 9
31	31	dollars ($500), or fractional part of it, that is paid for the purchase of property or the interest in an 10
32	32	acquired real estate company (inclusive of the value of any lien or encumbrance remaining at the 11
33	33	time the sale, grant, assignment, transfer, or conveyance or vesting occurs, or in the case of an 12
34	34	interest in an acquired real estate company, a percentage of the value of such lien or encumbrance 13
35	35	equivalent to the percentage interest in the acquired real estate company being granted, assigned, 14
36	36	transferred, conveyed, or vested). The tax is payable at the time of making, the execution, delivery, 15
37	37	acceptance, or presentation for recording of any instrument affecting such transfer, grant, 16
38	38	assignment, transfer, conveyance, or vesting. In the absence of an agreement to the contrary, the 17
39	39	tax shall be paid by the grantor, assignor, transferor, or person making the conveyance or vesting. 18
40	40	(b) In addition to the tax imposed by subsection (a), there is imposed, on each deed, 19
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44	44	instrument, or writing by which any residential real property sold is granted, assigned, transferred, 1
45	45	or conveyed to, or vested in, the purchaser or purchasers, or any other person or persons, by his, 2
46	46	her, or their direction, or on any grant, assignment, transfer, or conveyance or such vesting, by such 3
47	47	persons that has the effect of making any real estate company an acquired real estate company, 4
48	48	when the consideration paid exceeds eight hundred thousand dollars ($800,000), a tax at the rate of 5
49	49	two dollars and thirty cents ($2.30) for each five hundred dollars ($500), or fractional part of it, of 6
50	50	the consideration in excess of eight hundred thousand dollars ($800,000) that is paid for the 7
51	51	purchase of property or the interest in an acquired real estate company (inclusive of the value of 8
52	52	any lien or encumbrance remaining at the time the sale, grant, assignment, transfer, or conveyance 9
53	53	or vesting occurs, or in the case of an interest in an acquired real estate company, a percentage of 10
54	54	the value of such lien or encumbrance equivalent to the percentage interest in the acquired real 11
55	55	estate company being granted, assigned, transferred, conveyed, or vested). The tax imposed by this 12
56	56	subsection shall be paid at the same time and in the same manner as the tax imposed by subsection 13
57	57	(a). 14
58	58	(c) There is imposed, on each deed, instrument, or writing by which any commercial real 15
59	59	property sold is granted, assigned, transferred, or conveyed to, or vested in, the purchaser or 16
60	60	purchasers, or any other person or persons, by his, her, or their direction, or on any grant, 17
61	61	assignment, transfer, or conveyance or such vesting, by such persons that has the effect of making 18
62	62	any real estate company an acquired real estate company, when the consideration paid exceeds one 19
63	63	million five hundred thousand dollars ($1,500,000), a tax at the rate of three dollars and thirteen 20
64	64	cents ($3.13) for each five hundred dollars ($500), or fractional part of it, of the consideration in 21
65	65	excess of one million five hundred thousand dollars ($1,500,000) that is paid for the purchase of 22
66	66	commercial real property or the interest in an acquired real estate company (inclusive of the value 23
67	67	of any lien or encumbrance remaining at the time the sale, grant, assignment, transfer, or 24
68	68	conveyance or vesting occurs, or in the case of an interest in an acquired real estate company, a 25
69	69	percentage of the value of such lien or encumbrance equivalent to the percentage interest in the 26
70	70	acquired real estate company being granted, assigned, transferred, conveyed, or vested). The tax 27
71	71	imposed by this subsection shall be paid at the same time and in the same manner as the tax imposed 28
72	72	by subsections (a) and (b). 29
73	73	(c)(d) In the event no consideration is actually paid for the lands, tenements, or realty, the 30
74	74	instrument or interest in an acquired real estate company of conveyance shall contain a statement 31
75	75	to the effect that the consideration is such that no documentary stamps are required. 32
76	76	(d)(e) The tax shall be distributed as follows: 33
77	77	(1) With respect to the tax imposed by subsection (a): the tax administrator shall contribute 34
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81	81	to the distressed community relief program the sum of thirty cents ($.30) per two dollars and thirty 1
82	82	cents ($2.30) of the face value of the stamps to be distributed pursuant to § 45-13-12, and to the 2
83	83	housing resources and homelessness restricted receipt account established pursuant to § 42-128-2 3
84	84	the sum of thirty cents ($.30) per two dollars and thirty cents ($2.30) of the face value of the stamps. 4
85	85	The state shall retain sixty cents ($.60) for state use. The balance of the tax shall be retained by the 5
86	86	municipality collecting the tax. 6
87	87	(2) With respect to the tax imposed by subsection (b): the tax administrator shall contribute 7
88	88	the entire tax to the housing production fund established pursuant to § 42-128-2.1. 8
89	89	(3) With respect to the tax imposed by subsection (c): the tax administrator shall contribute 9
90	90	the entire tax to the Housing Resources and Homelessness restricted receipt account established 10
91	91	pursuant to § 42-128-2(3). 11
92	92	(3)(4) Notwithstanding the above, in the case of the tax on the grant, transfer, assignment, 12
93	93	or conveyance or vesting with respect to an acquired real estate company, the tax shall be collected 13
94	94	by the tax administrator and shall be distributed to the municipality where the real estate owned by 14
95	95	the acquired real estate company is located; provided, however, in the case of any such tax collected 15
96	96	by the tax administrator, if the acquired real estate company owns property located in more than 16
97	97	one municipality, the proceeds of the tax shall be allocated amongst said municipalities in the 17
98	98	proportion the assessed value of said real estate in each such municipality bears to the total of the 18
99	99	assessed values of all of the real estate owned by the acquired real estate company in Rhode Island. 19
100	100	Provided, however, in fiscal years 2004 and 2005, from the proceeds of this tax, the tax 20
101	101	administrator shall deposit as general revenues the sum of ninety cents ($.90) per two dollars and 21
102	102	thirty cents ($2.30) of the face value of the stamps. The balance of the tax on the purchase of 22
103	103	property shall be retained by the municipality collecting the tax. The balance of the tax on the 23
104	104	transfer with respect to an acquired real estate company, shall be collected by the tax administrator 24
105	105	and shall be distributed to the municipality where the property for which interest is sold is 25
106	106	physically located. Provided, however, that in the case of any tax collected by the tax administrator 26
107	107	with respect to an acquired real estate company where the acquired real estate company owns 27
108	108	property located in more than one municipality, the proceeds of the tax shall be allocated amongst 28
109	109	the municipalities in proportion that the assessed value in any such municipality bears to the 29
110	110	assessed values of all of the real estate owned by the acquired real estate company in Rhode Island. 30
111	111	(e)(f) For purposes of this section, the term “acquired real estate company” means a real 31
112	112	estate company that has undergone a change in ownership interest if (1) The change does not affect 32
113	113	the continuity of the operations of the company; and (2) The change, whether alone or together 33
114	114	with prior changes has the effect of granting, transferring, assigning, or conveying or vesting, 34
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118	118	transferring directly or indirectly, 50% or more of the total ownership in the company within a 1
119	119	period of three (3) years. For purposes of the foregoing subsection (e)(f)(2), a grant, transfer, 2
120	120	assignment, or conveyance or vesting, shall be deemed to have occurred within a period of three 3
121	121	(3) years of another grant(s), transfer(s), assignment(s), or conveyance(s) or vesting(s) if during the 4
122	122	period the granting, transferring, assigning, or conveying party provides the receiving party a 5
123	123	legally binding document granting, transferring, assigning, or conveying or vesting the realty or a 6
124	124	commitment or option enforceable at a future date to execute the grant, transfer, assignment, or 7
125	125	conveyance or vesting. 8
126	126	(f)(g) A real estate company is a corporation, limited liability company, partnership, or 9
127	127	other legal entity that meets any of the following: 10
128	128	(1) Is primarily engaged in the business of holding, selling, or leasing real estate, where 11
129	129	90% or more of the ownership of the real estate is held by 35 or fewer persons and which company 12
130	130	either (i) derives 60% or more of its annual gross receipts from the ownership or disposition of real 13
131	131	estate; or (ii) owns real estate the value of which comprises 90% or more of the value of the entity’s 14
132	132	entire tangible asset holdings exclusive of tangible assets that are fairly transferrable and actively 15
133	133	traded on an established market; or 16
134	134	(2) Ninety percent or more of the ownership interest in such entity is held by 35 or fewer 17
135	135	persons and the entity owns as 90% or more of the fair market value of its assets a direct or indirect 18
136	136	interest in a real estate company. An indirect ownership interest is an interest in an entity 90% or 19
137	137	more of which is held by 35 or fewer persons and the purpose of the entity is the ownership of a 20
138	138	real estate company. 21
139	139	(g)(h) In the case of a grant, assignment, transfer, or conveyance or vesting that results in 22
140	140	a real estate company becoming an acquired real estate company, the grantor, assignor, transferor, 23
141	141	or person making the conveyance or causing the vesting, shall file or cause to be filed with the 24
142	142	division of taxation, at least five (5) days prior to the grant, transfer, assignment, or conveyance or 25
143	143	vesting, notification of the proposed grant, transfer, assignment, or conveyance or vesting, the price, 26
144	144	terms and conditions thereof, and the character and location of all of the real estate assets held by 27
145	145	the real estate company and shall remit the tax imposed and owed pursuant to subsection (a). Any 28
146	146	such grant, transfer, assignment, or conveyance or vesting which results in a real estate company 29
147	147	becoming an acquired real estate company shall be fraudulent and void as against the state unless 30
148	148	the entity notifies the tax administrator in writing of the grant, transfer, assignment, or conveyance 31
149	149	or vesting as herein required in subsection (g)(h) and has paid the tax as required in subsection (a). 32
150	150	Upon the payment of the tax by the transferor, the tax administrator shall issue a certificate of the 33
151	151	payment of the tax which certificate shall be recordable in the land evidence records in each 34
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155	155	municipality in which such real estate company owns real estate. Where the real estate company 1
156	156	has assets other than interests in real estate located in Rhode Island, the tax shall be based upon the 2
157	157	assessed value of each parcel of property located in each municipality in the state of Rhode Island. 3
158	158	SECTION 2. This act shall take effect upon passage. 4
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165	165	EXPLANATION
166	166	BY THE LEGISLATIVE COUNCIL
167	167	OF
168	168	A N A C T
169	169	RELATING TO TAXATION -- REAL ESTATE CONVEYANCE TAX
170	170	***
171	171	This act would provide for an additional real estate conveyance tax of three dollars and 1
172	172	thirteen cents ($3.13) for commercial properties sold in excess of one million five hundred thousand 2
173	173	dollars ($1,500,000) for each five hundred dollars ($500), or factional part thereof over that amount. 3
174	174	This act would take effect upon passage. 4
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