Senate OKs bill to make tax exemption for certain incomplete, unoccupied dwellings permanent


STATE HOUSE — The Senate today passed legislation sponsored by Senate Majority Leader Michael J. McCaffrey (D-Dist. 29, Warwick) to make tax exemptions for properties under construction permanent.

A law sponsored by Senator McCaffrey in 2015 created an exemption from taxation for certain residential property developments which have not been completed or, if completed, have not been sold and occupied. The exemption does not affect taxes on common areas and facilities for residential condominiums.

The exemption is set to expire on Dec. 31. The bill (2021-S 0288) would remove that expiration, effectively making the tax exemption permanent.

“One of the economic indicators everyone talks about is new home construction,” said Senator McCaffrey. “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.”

Under the law, new construction on development property is exempt from the assessment of taxes as long as the owner files an affidavit claiming the exemption with the local tax assessor by Dec. 31 each year. The assessor then determines if the property on which the new construction is located is development property. If the real property is development property, the assessor exempts the new construction from the collection of taxes on improvements, until such time as the real property no longer qualifies as development property.

The law defines development property as “real property on which a single family residential dwelling or residential condominium is situated and said single family residential dwelling or residential condominium unit is not occupied, has never been occupied, is not under contract, and is on the market for sale.” It also includes improvements and/or rehabilitation of unoccupied single family residential dwellings or residential condominiums which the owner purchased out of a foreclosure sale, auction, or from a bank.

The measure now heads to the House of Representatives, where similar legislation (2021-H 5260) has been introduced by House Floor Manager John G. Edwards (D-Dist. 70, Tiverton, Portsmouth).



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