Rhode Island 2025 Regular Session

Rhode Island Senate Bill S0037 Compare Versions

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

Old	New	Differences
1	1
2	2
3	3
4	4
5	5	2025 -- S 0037
6	6	========
7	7	LC000438
8	8	========
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: Senators Gu, DiMario, Murray, Mack, Kallman, Bissaillon, and DiPalma
17	17	Date Introduced: January 23, 2025
18	18	Referred To: Senate Finance
19	19
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
41	41
42	42
43	43	LC000438 - Page 2 of 6
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) In addition to the taxes imposed by subsections (a) and (b) of this section, upon 15
59	59	enactment of a local ordinance, a municipality may impose, on each deed, instrument, or writing 16
60	60	by which any sold residential real property located in that municipality is granted, assigned, 17
61	61	transferred, or conveyed to, or vested in, the purchaser or purchasers, or any other person or 18
62	62	persons, by his, her, or their direction, or on any grant, assignment, transfer, or conveyance or such 19
63	63	vesting, by such persons that has the effect of making any real estate company an acquired real 20
64	64	estate company, when the consideration paid exceeds nine hundred thousand dollars ($900,000), a 21
65	65	tax of not more than ten dollars ($10.00) for each five hundred dollars ($500), or fractional part of 22
66	66	it, of the consideration in excess of nine hundred thousand dollars ($900,000) that is paid for the 23
67	67	purchase of property or the interest in an acquired real estate company (inclusive of the value of 24
68	68	any lien or encumbrance remaining at the time the sale, grant, assignment, transfer, or conveyance 25
69	69	or vesting occurs, or in the case of an interest in an acquired real estate company, a percentage of 26
70	70	the value of such lien or encumbrance equivalent to the percentage interest in the acquired real 27
71	71	estate company being granted, assigned, transferred, conveyed, or vested). The tax imposed by this 28
72	72	subsection shall be paid at the same time and in the same manner as the tax imposed by subsection 29
73	73	(a) of this section. 30
74	74	(c)(d) In the event no consideration is actually paid for the lands, tenements, or realty, the 31
75	75	instrument or interest in an acquired real estate company of conveyance shall contain a statement 32
76	76	to the effect that the consideration is such that no documentary stamps are required. 33
77	77	(d)(e) The tax shall be distributed as follows: 34
78	78
79	79
80	80	LC000438 - Page 3 of 6
81	81	(1) With respect to the tax imposed by subsection (a): the tax administrator shall contribute 1
82	82	to the distressed community relief program the sum of thirty cents ($.30) per two dollars and thirty 2
83	83	cents ($2.30) of the face value of the stamps to be distributed pursuant to § 45-13-12, and to the 3
84	84	housing resources and homelessness restricted receipt account established pursuant to § 42-128-2 4
85	85	the sum of thirty cents ($.30) per two dollars and thirty cents ($2.30) of the face value of the stamps. 5
86	86	The state shall retain sixty cents ($.60) for state use. The balance of the tax shall be retained by the 6
87	87	municipality collecting the tax. 7
88	88	(2) With respect to the tax imposed by subsection (b): the tax administrator shall contribute 8
89	89	the entire tax to the housing production fund established pursuant to § 42-128-2.1. 9
90	90	(3) With respect to the tax imposed by subsection (c) of this section, the municipality shall 10
91	91	retain the tax collected and deposit it into restricted accounts, that shall be allocated and spent only 11
92	92	for the creation and development of affordable housing, as defined in § 42-128-8.1, within the 12
93	93	municipality serving individuals or families at or below eighty percent (80%) of the area median 13
94	94	income. The municipality shall maintain a local affordable housing board to oversee the funds in 14
95	95	the restricted accounts and shall allocate the funds within two (2) years. The municipality shall 15
96	96	include in the housing element of their local comprehensive plan, if applicable, the process it will 16
97	97	use to allocate the funds. 17
98	98	(4) As an alternative to the provisions of subsection (e)(3) of this section, the municipality 18
99	99	may elect to transfer tax collections promptly upon receipt or within the two-year (2) period after 19
100	100	receipt to the housing resources commission, the Rhode Island department of housing, or Rhode 20
101	101	Island Housing, for the purpose of developing affordable housing within that community. 21
102	102	(3)(5) Notwithstanding the above, in the case of the tax on the grant, transfer, assignment, 22
103	103	or conveyance or vesting with respect to an acquired real estate company, the tax shall be collected 23
104	104	by the tax administrator and shall be distributed to the municipality where the real estate owned by 24
105	105	the acquired real estate company is located; provided, however, in the case of any such tax collected 25
106	106	by the tax administrator, if the acquired real estate company owns property located in more than 26
107	107	one municipality, the proceeds of the tax shall be allocated amongst said municipalities in the 27
108	108	proportion the assessed value of said real estate in each such municipality bears to the total of the 28
109	109	assessed values of all of the real estate owned by the acquired real estate company in Rhode Island. 29
110	110	Provided, however, in fiscal years 2004 and 2005, from the proceeds of this tax, the tax 30
111	111	administrator shall deposit as general revenues the sum of ninety cents ($.90) per two dollars and 31
112	112	thirty cents ($2.30) of the face value of the stamps. The balance of the tax on the purchase of 32
113	113	property shall be retained by the municipality collecting the tax. The balance of the tax on the 33
114	114	transfer with respect to an acquired real estate company, shall be collected by the tax administrator 34
115	115
116	116
117	117	LC000438 - Page 4 of 6
118	118	and shall be distributed to the municipality where the property for which interest is sold is 1
119	119	physically located. Provided, however, that in the case of any tax collected by the tax administrator 2
120	120	with respect to an acquired real estate company where the acquired real estate company owns 3
121	121	property located in more than one municipality, the proceeds of the tax shall be allocated amongst 4
122	122	the municipalities in proportion that the assessed value in any such municipality bears to the 5
123	123	assessed values of all of the real estate owned by the acquired real estate company in Rhode Island. 6
124	124	(e)(f) For purposes of this section, the term “acquired real estate company” means a real 7
125	125	estate company that has undergone a change in ownership interest if (1) The change does not affect 8
126	126	the continuity of the operations of the company; and (2) The change, whether alone or together 9
127	127	with prior changes has the effect of granting, transferring, assigning, or conveying or vesting, 10
128	128	transferring directly or indirectly, 50% or more of the total ownership in the company within a 11
129	129	period of three (3) years. For purposes of the foregoing subsection (e)(2), a grant, transfer, 12
130	130	assignment, or conveyance or vesting, shall be deemed to have occurred within a period of three 13
131	131	(3) years of another grant(s), transfer(s), assignment(s), or conveyance(s) or vesting(s) if during the 14
132	132	period the granting, transferring, assigning, or conveying party provides the receiving party a 15
133	133	legally binding document granting, transferring, assigning, or conveying or vesting the realty or a 16
134	134	commitment or option enforceable at a future date to execute the grant, transfer, assignment, or 17
135	135	conveyance or vesting. 18
136	136	(f)(g) A real estate company is a corporation, limited liability company, partnership, or 19
137	137	other legal entity that meets any of the following: 20
138	138	(1) Is primarily engaged in the business of holding, selling, or leasing real estate, where 21
139	139	90% or more of the ownership of the real estate is held by 35 or fewer persons and which company 22
140	140	either (i) derives 60% or more of its annual gross receipts from the ownership or disposition of real 23
141	141	estate; or (ii) owns real estate the value of which comprises 90% or more of the value of the entity’s 24
142	142	entire tangible asset holdings exclusive of tangible assets that are fairly transferrable and actively 25
143	143	traded on an established market; or 26
144	144	(2) Ninety percent or more of the ownership interest in such entity is held by 35 or fewer 27
145	145	persons and the entity owns as 90% or more of the fair market value of its assets a direct or indirect 28
146	146	interest in a real estate company. An indirect ownership interest is an interest in an entity 90% or 29
147	147	more of which is held by 35 or fewer persons and the purpose of the entity is the ownership of a 30
148	148	real estate company. 31
149	149	(g)(h) In the case of a grant, assignment, transfer, or conveyance or vesting that results in 32
150	150	a real estate company becoming an acquired real estate company, the grantor, assignor, transferor, 33
151	151	or person making the conveyance or causing the vesting, shall file or cause to be filed with the 34
152	152
153	153
154	154	LC000438 - Page 5 of 6
155	155	division of taxation, at least five (5) days prior to the grant, transfer, assignment, or conveyance or 1
156	156	vesting, notification of the proposed grant, transfer, assignment, or conveyance or vesting, the price, 2
157	157	terms and conditions thereof, and the character and location of all of the real estate assets held by 3
158	158	the real estate company and shall remit the tax imposed and owed pursuant to subsection (a). Any 4
159	159	such grant, transfer, assignment, or conveyance or vesting which results in a real estate company 5
160	160	becoming an acquired real estate company shall be fraudulent and void as against the state unless 6
161	161	the entity notifies the tax administrator in writing of the grant, transfer, assignment, or conveyance 7
162	162	or vesting as herein required in subsection (g) and has paid the tax as required in subsection (a). 8
163	163	Upon the payment of the tax by the transferor, the tax administrator shall issue a certificate of the 9
164	164	payment of the tax which certificate shall be recordable in the land evidence records in each 10
165	165	municipality in which such real estate company owns real estate. Where the real estate company 11
166	166	has assets other than interests in real estate located in Rhode Island, the tax shall be based upon the 12
167	167	assessed value of each parcel of property located in each municipality in the state of Rhode Island. 13
168	168	SECTION 2. This act shall take effect upon passage. 14
169	169	========
170	170	LC000438
171	171	========
172	172
173	173
174	174	LC000438 - Page 6 of 6
175	175	EXPLANATION
176	176	BY THE LEGISLATIVE COUNCIL
177	177	OF
178	178	A N A C T
179	179	RELATING TO TAXATION -- REAL ESTATE CONVEYANCE TAX
180	180	***
181	181	This act would allow a municipality to set an additional conveyance tax rate of not more 1
182	182	than ten dollars ($10.00) for each five hundred dollars ($500), or fractional part of that amount, of 2
183	183	the consideration in excess of nine hundred thousand dollars ($900,000). This act would also 3
184	184	require that the excess conveyance taxes collected alternatively be deposited in a restricted account 4
185	185	and distributed within two (2) years, to be used only for affordable housing for individuals or 5
186	186	families at or below eighty percent (80%) of the area median income or transferred to state housing 6
187	187	agencies for use in the community to develop affordable housing. 7
188	188	This act would take effect upon passage. 8
189	189	========
190	190	LC000438
191	191	========
192	192