AN ACT RELATING TO TAXATION -- REAL ESTATE CONVEYANCE TAX (Allows a municipality to set its own conveyance tax rate for residential properties sold in excess of $900,000.00 at $10 per $500. Provides collected taxes to be in a restricted account and distributed within 2 years for affordable housing.)

S2697

2026 -- S 2697
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LC004734
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
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A N A C T
RELATING TO TAXATION -- REAL ESTATE CONVEYANCE TAX

Introduced By:
Senators Gu, Kallman, McKenney, DiMario, and Burke

Date Introduced:
February 27, 2026

Referred To:
Senate Housing & Municipal Government
It is enacted by the General Assembly as follows:
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SECTION 1. Section 44-25-1 of the General Laws in Chapter 44-25 entitled "Real Estate
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Conveyance Tax" is hereby amended to read as follows:
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44-25-1. Tax imposed — Payment — Burden.
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(a) There is imposed, on each deed, instrument, or writing by which any lands, tenements,
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or other realty sold is granted, assigned, transferred, or conveyed, to, or vested in, the purchaser or
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purchasers, or any other person or persons, by his, her, or their direction, or on any grant,
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assignment, transfer, or conveyance or such vesting, by such persons that has the effect of making
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any real estate company an acquired real estate company, when the consideration paid exceeds one
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hundred dollars ($100), a tax at the rate of three dollars and seventy-five cents ($3.75) for each five
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hundred dollars ($500), or fractional part of it, that is paid for the purchase of property or the interest
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in an acquired real estate company (inclusive of the value of any lien or encumbrance remaining at
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the time the sale, grant, assignment, transfer, or conveyance or vesting occurs, or in the case of an
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interest in an acquired real estate company, a percentage of the value of such lien or encumbrance
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equivalent to the percentage interest in the acquired real estate company being granted, assigned,
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transferred, conveyed, or vested). The tax is payable at the time of making, the execution, delivery,
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acceptance, or presentation for recording of any instrument affecting such transfer, grant,
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assignment, transfer, conveyance, or vesting. In the absence of an agreement to the contrary, the
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tax shall be paid by the grantor, assignor, transferor, or person making the conveyance or vesting.
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(b)
(1)
In addition to the tax imposed by subsection (a), there is imposed, on each deed,

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instrument, or writing by which any residential real property sold is granted, assigned, transferred,
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or conveyed to, or vested in, the purchaser or purchasers, or any other person or persons, by his,
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her, or their direction, or on any grant, assignment, transfer, or conveyance or such vesting, by such
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persons that has the effect of making any real estate company an acquired real estate company,
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when the consideration paid exceeds eight hundred thousand dollars ($800,000), a tax at the rate of
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three dollars and seventy-five cents ($3.75) for each five hundred dollars ($500), or fractional part
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of it, of the consideration in excess of eight hundred thousand dollars ($800,000) that is paid for
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the purchase of residential real property or the interest in an acquired real estate company (inclusive
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of the value of any lien or encumbrance remaining at the time the sale, grant, assignment, transfer,
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or conveyance or vesting occurs, or in the case of an interest in an acquired real estate company, a
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percentage of the value of such lien or encumbrance equivalent to the percentage interest in the
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acquired real estate company being granted, assigned, transferred, conveyed, or vested). The tax
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imposed by this subsection shall be paid at the same time and in the same manner as the tax imposed
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by subsection (a) For tax years beginning on or after January 1, 2026, the threshold of eight hundred
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thousand dollars ($800,000) provided pursuant to this section shall be adjusted by the percentage
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increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the United
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States Department of Labor Statistics determined as of September 30 of the prior calendar years.
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Said adjustment shall be compounded annually and shall be rounded up to the nearest five-dollar
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($5.00) increment. In no event shall the threshold in any tax year be less than the prior tax year.
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(2) In addition to the taxes imposed by subsections (a) and (b)(1) of this section, upon
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enactment of a local ordinance, a municipality may impose, on each deed, instrument, or writing
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by which any sold residential real property located in that municipality is granted, assigned,
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transferred, or conveyed to, or vested in, the purchaser or purchasers, or any other person or
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persons, by his, her, or their direction, or on any grant, assignment, transfer, or conveyance or such
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vesting, by such persons that has the effect of making any real estate company an acquired real
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estate company, when the consideration paid exceeds nine hundred thousand dollars ($900,000) or
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such higher amount as may be adopted by ordinance, a tax of not more than ten dollars ($10.00)
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for each five hundred dollars ($500), or fractional part of it, of the consideration in excess of nine
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hundred thousand dollars ($900,000) or such higher amount as may be adopted by ordinance, that
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is paid for the purchase of property or the interest in an acquired real estate company (inclusive of
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the value of any lien or encumbrance remaining at the time the sale, grant, assignment, transfer, or
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conveyance or vesting occurs, or in the case of an interest in an acquired real estate company, a
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percentage of the value of such lien or encumbrance equivalent to the percentage interest in the
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acquired real estate company being granted, assigned, transferred, conveyed, or vested). The tax

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imposed by this subsection shall be paid at the same time and in the same manner as the tax imposed
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by subsection (a) of this section.
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(c) In the event no consideration is actually paid for the lands, tenements, or realty, the
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instrument or interest in an acquired real estate company of conveyance shall contain a statement
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to the effect that the consideration is such that no documentary stamps are required.
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(d) The tax shall be distributed as follows:
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(1) With respect to the tax imposed by subsection (a): the tax administrator shall contribute
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to the distressed community relief program the sum of fifty cents ($.50) per three dollars and
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seventy-five cents ($3.75) of the face value of the stamps to be distributed pursuant to § 45-13-12,
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and to the housing resources and homelessness restricted receipt account established pursuant to §
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42-128-2 the sum of fifty cents ($.50) per three dollars and seventy-five cents ($3.75) of the face
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value of the stamps. The state shall retain ninety-five cents ($.95) for state use. The balance of the
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tax shall be retained by the municipality collecting the tax.
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(2) With respect to the tax imposed by subsection (b): the tax administrator shall contribute
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to the housing production fund the sum of two dollars and fifty cents ($2.50) per three dollars and
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seventy-five cents ($3.75) to be distributed pursuant to § 42-128-2.1, and to the housing resources
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and homelessness restricted receipt account the sum of one dollar and twenty-five cents ($1.25) to
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be distributed pursuant to § 42-128-2.
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(3) With respect to the tax imposed by subsection (b)(2) of this section, the municipality
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shall retain the tax collected and deposit it into restricted accounts, that shall be allocated and spent
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only for the creation and development of affordable housing, as defined in § 42-128-8.1, within the
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municipality serving individuals or families at or below eighty percent (80%) of the area median
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income. The municipality shall maintain a local affordable housing board to oversee the funds in
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the restricted accounts and shall allocate the funds within five (5) years. The municipality shall
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include in the housing element of their local comprehensive plan, if applicable, the process it will
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use to allocate the funds.
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(4) As an alternative to the provisions of subsection (d)(3) of this section, the municipality
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may elect to transfer tax collections promptly upon receipt or within the two (2) year period after
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receipt to the housing resources commission, the Rhode Island department of housing, or Rhode
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Island Housing, for the purpose of developing affordable housing within that community; provided,
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however, any tax funds collected and deposited pursuant to subsection (d)(3) of this section and
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not allocated within five (5) years, shall be transferred to the Rhode Island department of housing
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for the purpose of developing affordable housing.
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(3)
(5)
Notwithstanding the above, in the case of the tax on the grant, transfer, assignment,

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or conveyance or vesting with respect to an acquired real estate company, the tax shall be collected
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by the tax administrator and shall be distributed to the municipality where the real estate owned by
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the acquired real estate company is located; provided, however, in the case of any such tax collected
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by the tax administrator, if the acquired real estate company owns property located in more than
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one municipality, the proceeds of the tax shall be allocated amongst said municipalities in the
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proportion the assessed value of said real estate in each such municipality bears to the total of the
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assessed values of all of the real estate owned by the acquired real estate company in Rhode Island.
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Provided, however, in fiscal years 2004 and 2005, from the proceeds of this tax, the tax
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administrator shall deposit as general revenues the sum of ninety cents ($.90) per two dollars and
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thirty cents ($2.30) of the face value of the stamps. The balance of the tax on the purchase of
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property shall be retained by the municipality collecting the tax. The balance of the tax on the
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transfer with respect to an acquired real estate company, shall be collected by the tax administrator
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and shall be distributed to the municipality where the property for which interest is sold is
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physically located. Provided, however, that in the case of any tax collected by the tax administrator
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with respect to an acquired real estate company where the acquired real estate company owns
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property located in more than one municipality, the proceeds of the tax shall be allocated amongst
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the municipalities in proportion that the assessed value in any such municipality bears to the
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assessed values of all of the real estate owned by the acquired real estate company in Rhode Island.
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(e) For purposes of this section, the term “acquired real estate company” means a real estate
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company that has undergone a change in ownership interest if (1) The change does not affect the
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continuity of the operations of the company; and (2) The change, whether alone or together with
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prior changes has the effect of granting, transferring, assigning, or conveying or vesting,
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transferring directly or indirectly, 50% or more of the total ownership in the company within a
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period of three (3) years. For purposes of the foregoing subsection (e)(2), a grant, transfer,
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assignment, or conveyance or vesting, shall be deemed to have occurred within a period of three
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(3) years of another grant(s), transfer(s), assignment(s), or conveyance(s) or vesting(s) if during the
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period the granting, transferring, assigning, or conveying party provides the receiving party a
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legally binding document granting, transferring, assigning, or conveying or vesting the realty or a
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commitment or option enforceable at a future date to execute the grant, transfer, assignment, or
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conveyance or vesting.
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(f) A real estate company is a corporation, limited liability company, partnership, or other
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legal entity that meets any of the following:
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(1) Is primarily engaged in the business of holding, selling, or leasing real estate, where
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90% or more of the ownership of the real estate is held by 35 or fewer persons and which company

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either (i) Derives 60% or more of its annual gross receipts from the ownership or disposition of real
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estate; or (ii) Owns real estate the value of which comprises 90% or more of the value of the entity’s
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entire tangible asset holdings exclusive of tangible assets that are fairly transferrable and actively
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traded on an established market; or
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(2) Ninety percent or more of the ownership interest in such entity is held by 35 or fewer
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persons and the entity owns as 90% or more of the fair market value of its assets a direct or indirect
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interest in a real estate company. An indirect ownership interest is an interest in an entity 90% or
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more of which is held by 35 or fewer persons and the purpose of the entity is the ownership of a
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real estate company.
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(g) In the case of a grant, assignment, transfer, or conveyance or vesting that results in a
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real estate company becoming an acquired real estate company, the grantor, assignor, transferor, or
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person making the conveyance or causing the vesting, shall file or cause to be filed with the division
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of taxation, at least five (5) days prior to the grant, transfer, assignment, or conveyance or vesting,
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notification of the proposed grant, transfer, assignment, or conveyance or vesting, the price, terms
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and conditions thereof, and the character and location of all of the real estate assets held by the real
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estate company and shall remit the tax imposed and owed pursuant to subsection (a). Any such
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grant, transfer, assignment, or conveyance or vesting which results in a real estate company
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becoming an acquired real estate company shall be fraudulent and void as against the state unless
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the entity notifies the tax administrator in writing of the grant, transfer, assignment, or conveyance
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or vesting as herein required in subsection (g) and has paid the tax as required in subsection (a).
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Upon the payment of the tax by the transferor, the tax administrator shall issue a certificate of the
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payment of the tax which certificate shall be recordable in the land evidence records in each
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municipality in which such real estate company owns real estate. Where the real estate company
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has assets other than interests in real estate located in Rhode Island, the tax shall be based upon the
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assessed value of each parcel of property located in each municipality in the state of Rhode Island.
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SECTION 2. This act shall take effect upon passage.
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO TAXATION -- REAL ESTATE CONVEYANCE TAX
***
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This act would allow a municipality to set an additional conveyance tax rate of not more
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than ten dollars ($10.00) for each five hundred dollars ($500), or fractional part of that amount, of
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the consideration in excess of nine hundred thousand dollars ($900,000) or such higher amount as
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adopted by ordinance. This act would also require that the excess conveyance taxes collected
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alternatively be deposited in a restricted account and distributed within two (2) years, to be used
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only for affordable housing for individuals or families at or below eighty percent (80%) of the area
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median income or transferred to state housing agencies for use in the community to develop
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affordable housing.
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This act would take effect upon passage.
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