PROVIDENCE – The R.I. Senate has approved legislation that will make permanent tax exemptions that apply to residential properties that are under construction or that have unsold, unoccupied dwellings.
The existing law, sponsored by now-Senate Majority Leader Michael J. McCaffrey, D-Warwick, in 2015, created exemptions from taxation for residential developments that were either not complete or if completed, had not been sold and occupied.
The law was set to expire on Dec. 31. Under a bill McCaffrey introduced this session, that sunset would be removed, and the tax break made permanent.
The exemption doesn’t apply to common areas or facilities in residential condos.
The exemption is an incentive for home production, which is needed in Rhode Island, McCaffrey said in a news release.
“One of the economic indicators everyone talks about is new-home construction,” he said. “But building new homes takes time – especially during a pandemic – and the levy of property taxes can add up for the developer. This is a good bill that will help encourage the building of new homes by putting off the assessment of those taxes until the property is finished and occupied.”
The law defines development property as any real property on which a single-family residential dwelling or a residential condominium is located, and which is not sold or under contract, and which is on the market for sale. It also covers improvements or rehabilitation of residential properties that are purchased out of a foreclosure sale, auction or from a bank.
The R.I. House of Representatives has a companion bill that was introduced by House Floor Manager John G. Edwards, D-Tiverton.
Mary MacDonald is a staff writer for the PBN. Contact her at MacDonald@PBN.com.