Ever since Governor Gina Raimondo announced a proposal to impose a statewide property tax on residential properties over $1 million, if their owners do not live in them for a majority of the year, debate has raged as to what would be included. Much of the discussion has been behind the scenes, among people who follow Rhode Island policy closely and representatives of groups that might be affected.
Initially, anonymous blogger CoffeeBlackRI suggested that the tax would apply to rental apartment properties worth more than the threshold. I replied with an interpretation of the law suggesting that it would not.
The director of Office of Revenue Analysis, Paul Dion, told Katherine Gregg of the Providence Journal that his estimate of revenue that would be produced by the tax included “two-to-five-family residences,” along with other properties. Some observers took that as conclusive evidence that the tax would apply to small apartment complexes.
A budget summary from Ted Nesi, posted today on WPRI’s Web site, seemed to confirm the interpretation. Nesi quoted from a report by the House Fiscal office, “It appears that the intent of the legislation and the revenue estimate excludes apartment buildings from the tax; however, as written, the tax would apply to these properties.”
In a statement to the Ocean State Current, Raimondo spokeswoman Marie Aberger echoed House Fiscal’s report, affirming that “the intent is to exclude apartment buildings.”
Specifically, the intent is to apply it to the following categories, if they are worth $1 million or more: non-owner occupied single family residences, two-to-five family residences (only if they are non-owner occupied and not available for long-term tenants), and non-owner occupied estates, seasonal and beach property, residential condos, time shared condos, dockominiums, mobile homes, and vacant residential land.
The “two-to-five family residences” category was included in the estimate from Revenue Analysis because available data does not allow finer differentiation. For example, wealthy seasonal residents often employ groundskeepers who reside on the property year round.
According to Aberger, the administration’s plan had been to draft more-specific guidance while writing regulations to enact the law, if passed. “However,” she continued, “we are happy to work during the legislative process to modify the language, if necessary, to ensure that the intent of the legislation is carried out.”