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SB 2450

AN ACT RELATING TO TAXATION -- REAL ESTATE CONVEYANCE TAX

2026 Regular Session Introduced by Meghan Kallman

The bill imposes a tax on real estate transfers, with a higher rate for residential properties over 800,000 and requires allocation of proceeds to housing programs, while also taxi

06/10/2026 Senate read and passed
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Bill Summary · SB 2450

Summary of Bill SB 2450 (2026) – Rhode Island Real Estate Conveyance Tax

Purpose and Scope

  • Overall aim: Amend the Real Estate Conveyance Tax provisions to modify how the tax is assessed, allocated, and administered, particularly in transactions involving real estate companies (referred to as “acquired real estate companies”) and multi-municipality property.
  • The act targets real estate conveyances, including transfers that result in a real estate company acquiring a 50% or greater ownership within a rolling 3-year window, and introduces adjustments for multi-municipality properties.

Key Provisions

1) Tax Imposed on Conveyances (Section 44-25-1(a))

  • General tax basis: A tax of $3.75 for every $500 (or fraction) of consideration paid for the transfer of lands or realty, when the transfer results in ownership by the purchaser or an acquired real estate company.
  • Applicability to acquired real estate companies: The same tax rate applies when the transfer affects an acquired real estate company (including liens/encumbrances).
  • Payment timing and burden: Tax due at the time of making, execution, delivery, acceptance, or presentation for recording. Absent an agreement otherwise, the grantor/transferor pays the tax.
  • Multi-municipality allocation: If property is located in more than one municipality, the tax is allocated proportionally to the assessed value of the property in each municipality.

2) Additional Residential Property Tax (Section 44-25-1(b))

  • Higher-rate tier for residential real property: For residential transfers where the consideration exceeds $800,000, an additional tax of $3.75 per $500 (or fraction) of the amount over $800,000 is imposed.
  • Computation: Applies to the portion of the consideration in excess of $800,000 (including encumbrances/liens proportional to the ownership percentage).
  • Timing and distribution: Paid in the same manner and to the same municipalities as the standard conveyance tax.
  • CPI adjustment: Starting in tax years 2026 and onward, the $800,000 threshold is adjusted annually for inflation using the CPI-U (as of Sept 30 preceding each year), compounded annually and rounded up to the nearest $5. The threshold cannot be reduced from the prior year.

3) Declarations if No Consideration Paid (Section 44-25-1(c))

  • If no consideration is paid for the conveyed lands, the instrument must state that no documentary stamps are required.

4) Tax Distribution (Section 44-25-1(d))

  • Allocation of proceeds from (a) and (b) taxes:
    • Subsection (a) tax: Split among state, distressed community relief program, housing resources and homelessness restricted receipt account, with the state retaining the majority for general state use; municipalities receive the balance.
    • Subsection (b) tax: A split toward the housing production fund and housing resources and homelessness accounts.
    • For acquired real estate company transfers, the collected tax is distributed to the municipality where the property owned by the company is located, with allocations proportional to each municipality’s share of the company’s Rhode Island real estate value if multiple municipalities are involved. There is a historical note about allocations for fiscal years 2004-2005 that affects general revenues, but these provisions appear to reflect earlier practice and are included for context.

5) Definition of Acquired Real Estate Company (Section 44-25-1(e))

  • An acquired real estate company is defined as a real estate company that:
    • Experiences a change in ownership interest that does not disrupt business continuity, and
    • Results in 50% or more of total ownership being granted/transferred/vested within a 3-year period.
  • For purposes of the 3-year lookback, a legally binding document granting rights to purchase or a commitment to transfer can count toward determining whether the 3-year threshold was met.

6) Definition of Real Estate Company (Section 44-25-1(f))

  • A real estate company is an entity (corporation, LLC, partnership, etc.) primarily engaged in owning, selling, or leasing real estate, where:
    • 90% or more of ownership is held by 35 or fewer persons, and
    • The company derives 60%+ of annual gross receipts from real estate activities, or the entity owns real estate valued at least 90% of its total assets (excluding market-tradable assets), or
    • 90%+ ownership is held by 35 or fewer persons and the entity owns 90%+ of the fair market value of its assets in real estate.

7) Notice and Tax Payment for Acquisitions (Section 44-25-1(g))

  • If a grant/transfer/vesting results in an acquired real estate company, the grantor/transferor must notify the Rhode Island Division of Taxation at least 5 days prior to the transaction, including price, terms, and the character/location of assets.
  • The transferor must remit the tax owed at that time.
  • A grant/transfer that creates an acquired real estate company without proper notification and tax payment is fraudulent and void against the state.
  • Upon payment, the tax administrator issues a certificate of payment that can be recorded in land evidence records in each municipality where the company owns real estate.
  • Tax basis for multi-municipality real estate is the assessed value of each parcel in each municipality.

Effective Date

  • This act takes effect upon passage.

Potential Impacts

  • Administrative burden and compliance: Transactions involving multi-municipal property or acquisitions of real estate companies would require careful calculation, allocation, and timely notification.
  • Revenue implications: Introduces a higher residential rate above $800,000 and reallocates portions of tax receipts to housing-related programs and funds, potentially increasing funding for distressed communities, housing production, and homelessness programs.
  • Multi-municipality considerations: Ensures a fairer distribution of tax proceeds where property spans multiple municipalities.
  • Market effects: Might influence high-value property transactions and corporate real estate reorganizations due to the added tax and reporting requirements.

If you’d like, I can provide a side-by-side comparison with current law or prepare a one-page briefing for policymakers.

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

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