Conveyance Tax Changes
Starting October 1, 2025, Rhode Island will implement higher real estate conveyance taxes affecting all residential property sales.
· The conveyance tax will increase from $2.30 per $500 (or $4.60 per $1000) to $4.60 per $500 (or $7.50 per $1000) of the sales price. This applies to single-family homes, multi-family, condos, and residential land sales, regardless of value.
· Sales over $800,000 will incur an additional Tier 2 surcharge: $3.75 per $500 (or $15 per $1000) on the portion above $800,000.
Example Calculation
· Home sells for $1,000,000
· Tax on first $800,000: $6,000 (800,000 / 1000 x 4.6)
· Tax on remaining $200,000: $3,000 (200,000 / 1000 x 4.6)
· Total conveyance tax due at closing: $9,000
Impact on Sellers
· Higher closing costs will reduce seller net proceeds.
· Even if a Purchase & Sale Agreement is signed before October 1, 2025, the new rates apply if closing occurs on or after that date.
"Taylor Swift Tax" on Non-Owner Occupied Properties
The Non-Owner Occupied Property Tax Act introduces a surcharge on luxury second homes valued at $1 million or more.
· Applies to non-primary residences unoccupied for more than 183 days in a calendar year.
· Tax rate: $2.50 per $500 (or $5.00 per $1000) on the amount above the first $1,000,000.
· Exemptions: Owners can avoid the tax by making the property their primary residence for more than 183 days, or by renting it out for at least that period.
Seller Considerations
· May discourage luxury buyers from choosing Rhode Island over other New England states.
· Inherited properties, such as summer cottages now valued over $1 million, may be subject to the new tax.
Conclusion
These new conveyance taxes, prospective buyers and sellers need to be aware of. Please reach out if you have questions. Thank you.
