Clarifies the tax treatment of qualifying low-income housing.
The essence of S1141 is to align the state's definition of qualifying low-income housing with certain federal standards. The bill requires future housing units that want to receive low-income tax treatment to conform to the federal definition of low-income units in qualified housing projects. However, it also allows existing units that meet the state’s definition of affordable housing, approved as of December 31, 2024, to retain their tax benefits. This dual approach is aimed at ensuring that new constructions comply with federal guidelines while protecting previously approved affordable housing units.
S1141 is a legislative act that concerns the taxation policy related to low-income housing in Rhode Island. Specifically, the bill amends Section 44-5-13.11 of the General Laws concerning the levy and assessment of local taxes. It clarifies the tax treatment of residential properties that qualify as low-income housing, which have been issued an occupancy permit post-January 1, 1995, after substantial rehabilitation. The bill stipulates that such properties may be taxed at a rate of eight percent of the previous year's gross scheduled rental income or a lesser percentage determined by municipalities.
One notable point of contention surrounding S1141 is the potential impact on local governments’ abilities to manage housing and tax affairs. Proponents argue that by clarifying the tax treatment and aligning it with federal definitions, the legislation will create a more consistent and fair framework for taxing low-income housing. Critics, however, may express concerns about the rigidity this could impose on local tax assessments, potentially leading to challenges in addressing unique housing needs within specific communities.