Closing on a home is already expensive, but new budget proposals in Rhode Island could drive costs even higher.
The Rhode Island Association of Realtors is raising concerns, arguing two proposed tax changes would hit buyers and sellers hard, making the state’s fragile housing market even more unaffordable.
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"Please, don’t take from our housing market at the moment to balance the budget for other items, it’s going to be detrimental," association president Chris Whitten told NBC 10 News.
One measure would hike the conveyance tax — a seller’s fee — by 63% across the board. The other, nicknamed the “Taylor Swift tax,” would add new costs to seasonal or second homes. Here’s what’s behind these new taxes and why they could spell bigger trouble for Rhode Island’s housing market.
Luxury homes in the crosshairs
Rhode Island’s budget plan targets high-end vacation homes — with a proposal nicknamed after a pop star grabbing headlines. One of the proposals would add a new surcharge on second homes worth more than $1 million, unofficially branded the “Taylor Swift Tax."
If it moves forward, owners of non-primary residences that sit empty for more than half the year would owe an annual fee of $2.50 for every $500 of value above the $1 million threshold. A $2.5 million lakefront cottage, for example, could face an extra $7,500 a year in taxes — simply for sitting vacant too long.
Even Taylor Swift herself might think twice about keeping her Watch Hill estate. If this measure passes, her sprawling getaway could rack up an extra $136,000 a year in taxes.
The second major proposal would raise the conveyance tax — the fee sellers pay at closing — from $2.30 to $3.75 for every $500 of a home’s sale price, a 63% increase. For context, the average home in Rhode Island sells for about $492,939, according to Zillow. Under the new rate, that would mean about $3,700 in conveyance tax, up from roughly $2,200.
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A balancing act between health care and housing
While the new fees may sting, supporters say they’re necessary to tackle two major crises: a health care system on life support and an anemic housing market.
House Speaker Joe Shekarchi said the budget needed fresh revenue to prop up primary care and Medicaid funding.
“To address Rhode Island’s crisis in health care, we needed to make tough decisions,” he told NBC 10.
At the end of May, Attorney General Peter Neronha rolled out a sweeping plan to fix the state’s health care system, including raising Medicaid reimbursement rates to match Medicare for primary care — a move aimed at keeping local clinics afloat and reducing waitlists. In a recent press release, he warned that without action, Rhode Island could face what he called “spectacular failure.”
Supporters also argue that seasonal ownership inflates home prices and leaves properties vacant for much of the year. At the same time, the median home price in the Ocean State has climbed to historic highs, and average rent for a two-bedroom has surpassed $2,000 a month — leaving at least a third of Rhode Island households spending more than they can afford just to keep a roof overhead, according to The Newport Buzz.
By taxing luxury properties and adding costs to real estate transactions, supporters believe the state can reinvest in housing access for those who need it most. Critics argue it could make buying or selling even harder in an already tight market.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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