T
he House budget proposal includes a significant increase in the conveyance tax, which would be paid by house buyers. For example, a $500,000 house sale would incur an additional $1,450 in taxes. The Rhode Island Association of Realtors is strongly opposed to this measure, arguing that it would further complicate the state's already struggling real estate market.

    Rhode Island is facing a severe housing crisis, with the fewest new homes being built and the least number of homes on the market since the pandemic began. Home listings have never fully rebounded from the onset of the pandemic, representing a significant decrease in supply while demand for homes has remained steady. The proposed tax increase would send most of the funds to programs for homeless Rhode Islanders.

    The conveyance tax would be increased from $2.30 per $500 of value to $3.75, which is a 63% increase over the current rate of $4.60 per $1,000 of value. This tax rate is lower than property tax rates in most cities and towns. The bill also calls for increasing the "tier 2" tax on residential property sales above $800,000.

    Home prices have nearly doubled between 2019 and 2024, but the proposed conveyance tax doesn't move the threshold of increased taxation. It's unclear how much money the increased tax rate would raise, but it's a significant part of the reason the money allocated to homelessness programs has increased from $4 million in Gov. Dan McKee's budget to $8.5 million.

    Properties under $800,000 would see increases of under $1,000 to $2,000 when sold, while properties over $800,000 would face higher tax rates, ranging from $3,480 for a $1 million house to $55,680 for a $10 million house. The most expensive house sale in 2024 was $12.25 million, and the buyer paid $109,020 in conveyance tax. Under the proposed increased tax rate, that same purchase would have cost $177,750 in conveyance tax.

    The conveyance tax is levied just at the time of sale and isn't the only tax that real estate agents are worried about. They're also lobbying against a proposed yearly tax on homes with an assessed value of $1 million or more that are unoccupied for more than 183 days a year, known as the "Taylor Swift tax."