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SB 2232

AN ACT RELATING TO TAXATION -- REAL ESTATE CONVEYANCE TAX

2026 Regular Session Introduced by Jonathon Acosta and 9 co-sponsors

Adds a new tiered residential conveyance tax above $800k and lets towns add a local surcharge to fund affordable housing, directing proceeds to housing programs.

05/12/2026 Committee heard
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WeVote Research Nonpartisan
Bill Summary · SB 2232

Summary of Bill: SB 2232 (Rhode Island) – Real Estate Conveyance Tax

Purpose and intent

  • The bill proposes updates to Rhode Island’s real estate conveyance tax structure, with a focus on:
    • Maintaining the existing tax on transfers that involve acquired real estate companies.
    • Adding a new, locally set additional conveyance tax on residential property transfers above a high threshold.
    • Directing certain tax revenues to affordable housing and related housing programs.

Key provisions and changes

  • General tax on transfers (existing framework)

    • The bill retains the base conveyance tax on deeds, instruments, or writings that transfer lands or interests, including transfers affecting an acquired real estate company, when consideration exceeds $100.
    • Base tax rate: $3.75 for each $500 (or fractional part) of consideration, payable at the time of conveyance.
    • This base tax applies to all conveyances that result in an acquired real estate company being involved, including encumbrances and liens.

  • Additional tax on residential real property transfers (new threshold)

    • A new tiered tax applies to residential property transfers when consideration exceeds $800,000.
    • For such residential transfers, there is an additional tax of $3.75 for each $500 (or fraction) of the amount above $800,000.
    • The $800,000 threshold is adjustable annually for CPI-U, compounded and rounded to the nearest $5, and cannot drop below the prior year’s threshold.
    • Timeline for payment aligns with the base tax (same due date and method).

  • Municipal option for local surcharge (new local control)

    • Municipalities may enact a local ordinance to impose an additional residential conveyance tax on purchases above $900,000 (not to exceed $10 per $500 or fraction).
    • This local tax is capped and would apply only to transfers of residential property in that municipality, with revenue directed to affordable housing development.
    • Local tax proceeds must be deposited into restricted accounts and spent within five years on affordable housing for those at or below 80% of area median income (AMI), or transferred to state housing agencies for use in local affordable housing efforts.
    • Alternatively, municipalities may choose to transfer collections to state housing agencies within two years, with unallocated funds after five years reverting to the state for affordable housing purposes.

  • Allocation and use of revenues (diversion and distribution)

    • The bill specifies how the base and any additional taxes are distributed:
    • A portion goes to distressed community relief programs and housing resources/homelessness accounts.
    • A majority portion is retained by the state or allocated to municipalities collecting the tax, with specific allocations to housing-related funds and programs.
    • For the acquired real estate company tax (non-residential transfers), proceeds are allocated to the municipality where the property is located (or proportionally among multiple municipalities if the company’s Rhode Island assets span more than one).
    • Historical note: there are transitional provisions referencing prior years (2004–2005) for allocation in those periods, but these would be superseded by the new framework.

  • Definition of “acquired real estate company” and related rules

    • The act defines an “acquired real estate company” as one where ownership changes 50% or more within a rolling three-year window, with specific criteria for determining when changes count as acquisitions.
    • The bill includes thresholds for determining whether a real estate company is primarily engaged in real estate holding/sales/leasing (and related ownership concentration rules).

  • Compliance and enforcement provisions

    • Grantors/transferors must notify the Rhode Island Division of Taxation at least five days prior to certain transfers that would create an acquired real estate company, including the price, terms, and location of assets, and must remit the tax due.
    • Any transfer creating an acquired real estate company without proper notification and payment would be considered fraudulent and void against the state.

  • Effective date

    • The act would take effect upon passage.

Who would be affected

  • Property purchasers and sellers:
    • All conveyances of real property subject to Rhode Island real estate conveyance tax.
    • Specifically, residential property transfers crossing the $800,000 threshold would incur the new additional tax.
  • Acquired real estate companies and their owners/shareholders:
    • Transfers that involve an acquired real estate company trigger the base tax (and possibly the additional $800k+ tax, depending on the transaction type).
  • Municipalities:
    • Opportunities to enact local conveyance taxes of up to $10 per $500 on high-value residential transfers.
    • Municipal housing authorities and local affordable housing boards would oversee restricted funds if the local option is adopted.
  • State and housing programs:
    • A portion of receipts would support distressed community relief, housing resources, homelessness programs, and dedicated affordable housing funds (state and/or local).

Procedural and timeline aspects

  • Bill status and process:
    • Introduced January 23, 2026; referred to Senate Finance.
    • Scheduled for hearing/consideration in May 2026.
  • Phased and adjustable thresholds:
    • The $800,000 threshold for the new residential tax is adjustable annually with CPI-U changes, compounded and rounded to the nearest $5, and not allowed to decrease below the prior year.
  • Local option timeline:
    • If a municipality enacts the local ordinance, revenue rules apply to that jurisdiction, with specified timeframes for allocation (within five years) and potential transfers to state housing agencies if funds are not allocated.

Observations for readers

  • The bill preserves the core conveyance tax while introducing a significant new threshold for residential property and empowering municipalities to impose an additional local levy to fund affordable housing.
  • Revenues are explicitly earmarked for affordable housing, homelessness reduction, and related housing programs, emphasizing the policy goal of expanding affordable housing capacity.
  • The framework includes detailed administration, reporting, and notification requirements to ensure compliance and proper allocation of funds.

Compiled from official sources — confirm details with the bill’s official record.

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