2022 -- S 2759 | |
======== | |
LC005036 | |
======== | |
STATE OF RHODE ISLAND | |
IN GENERAL ASSEMBLY | |
JANUARY SESSION, A.D. 2022 | |
____________ | |
A N A C T | |
RELATING TO TAXATION -- REAL ESTATE CONVEYANCE TAX | |
| |
Introduced By: Senators Mendes, and Calkin | |
Date Introduced: March 24, 2022 | |
Referred To: Senate Finance | |
It is enacted by the General Assembly as follows: | |
1 | SECTION 1. Section 44-25-1 of the General Laws in Chapter 44-25 entitled "Real Estate |
2 | Conveyance Tax" is hereby amended to read as follows: |
3 | 44-25-1. Tax imposed -- Payment -- Burden. [Effective January 1, 2022.] |
4 | (a) There is imposed, on each deed, instrument, or writing by which any lands, tenements, |
5 | or other realty sold is granted, assigned, transferred, or conveyed to, or vested in, the purchaser or |
6 | purchasers, or any other person or persons, by his, her, or their direction, or on any grant, |
7 | assignment, transfer, or conveyance or such vesting, by such persons that has the effect of making |
8 | any real estate company an acquired real estate company, when the consideration paid exceeds one |
9 | hundred dollars ($100), a tax at the rate of two dollars and thirty cents ($2.30) for each five hundred |
10 | dollars ($500), or fractional part of it, that is paid for the purchase of property or the interest in an |
11 | acquired real estate company (inclusive of the value of any lien or encumbrance remaining at the |
12 | time the sale, grant, assignment, transfer or conveyance or vesting occurs, or in the case of an |
13 | interest in an acquired real estate company, a percentage of the value of such lien or encumbrance |
14 | equivalent to the percentage interest in the acquired real estate company being granted, assigned, |
15 | transferred, conveyed or vested). The tax is payable at the time of making, the execution, delivery, |
16 | acceptance or presentation for recording of any instrument affecting such transfer grant, |
17 | assignment, transfer, conveyance or vesting. In the absence of an agreement to the contrary, the tax |
18 | shall be paid by the grantor, assignor, transferor or person making the conveyance or vesting; |
19 | provided, however, the sale of homes not considered the primary residence to the seller shall be |
| |
1 | taxed pursuant to subsection (c) of this section. |
2 | (b) In addition to the tax imposed by subsection (a), there is imposed, on each deed, |
3 | instrument, or writing by which any residential real property sold is granted, assigned, transferred, |
4 | or conveyed to, or vested in, the purchaser or purchasers, or any other person or persons, by his, |
5 | her, or their direction, or on any grant, assignment, transfer, or conveyance or such vesting, by such |
6 | persons that has the effect of making any real estate company an acquired real estate company, |
7 | when the consideration paid exceeds eight hundred thousand dollars ($800,000), a tax at the rate of |
8 | two dollars and thirty cents ($2.30) for each five hundred dollars ($500), or fractional part of it, of |
9 | the consideration in excess of eight hundred thousand dollars ($800,000) that is paid for the |
10 | purchase of property or the interest in an acquired real estate company (inclusive of the value of |
11 | any lien or encumbrance remaining at the time the sale, grant, assignment, transfer, or conveyance |
12 | or vesting occurs, or in the case of an interest in an acquired real estate company, a percentage of |
13 | the value of such lien or encumbrance equivalent to the percentage interest in the acquired real |
14 | estate company being granted, assigned, transferred, conveyed, or vested). The tax imposed by this |
15 | subsection shall be paid at the same time and in the same manner as the tax imposed by subsection |
16 | (a). |
17 | (c) There is imposed, on each deed, instrument, or writing by which any residential real |
18 | property sold is granted, assigned, transferred, or conveyed to, or vested in, the purchaser or |
19 | purchasers, or any person or persons, by his or her or their discretion, or on any grant, assignment, |
20 | transfer, or conveyance or such vesting, by such persons which has the effect of making any real |
21 | estate company an acquired real estate company, when the property subject to the sale is not a |
22 | primary residence and assess at over two hundred thousand dollars ($200,000), a tax at the rate of |
23 | five percent (5%) of the total assessed value of the property. The tax imposed by this subsection |
24 | shall be paid at the same time and in the same manner as the tax imposed by subsection (a) of this |
25 | section. |
26 | (c)(d) In the event no consideration is actually paid for the lands, tenements, or realty, the |
27 | instrument or interest in an acquired real estate company of conveyance shall contain a statement |
28 | to the effect that the consideration is such that no documentary stamps are required. |
29 | (d)(e) The tax shall be distributed as follows: |
30 | (1) With respect to the tax imposed by subsection (a): the tax administrator shall contribute |
31 | to the distressed community relief program the sum of thirty cents ($.30) per two dollars and thirty |
32 | cents ($2.30) of the face value of the stamps to be distributed pursuant to § 45-13-12, and to the |
33 | housing resources commission restricted receipts account the sum of thirty cents ($.30) per two |
34 | dollars and thirty cents ($2.30) of the face value of the stamps. Funds will be administered by the |
| LC005036 - Page 2 of 6 |
1 | office of housing and community development, through the housing resources commission. The |
2 | state shall retain sixty cents ($.60) for state use. The balance of the tax shall be retained by the |
3 | municipality collecting the tax. |
4 | (2) With respect to the tax imposed by subsection (b): the tax administrator shall contribute |
5 | the entire tax to the housing production fund established pursuant to § 42-128-2.1. |
6 | (3) Notwithstanding the above, in the case of the tax on the grant, transfer, assignment or |
7 | conveyance or vesting with respect to an acquired real estate company, the tax shall be collected |
8 | by the tax administrator and shall be distributed to the municipality where the real estate owned by |
9 | the acquired real estate company is located; provided, however, in the case of any such tax collected |
10 | by the tax administrator, if the acquired real estate company owns property located in more than |
11 | one municipality, the proceeds of the tax shall be allocated amongst said municipalities in the |
12 | proportion the assessed value of said real estate in each such municipality bears to the total of the |
13 | assessed values of all of the real estate owned by the acquired real estate company in Rhode Island. |
14 | Provided, however, in fiscal years 2004 and 2005, from the proceeds of this tax, the tax |
15 | administrator shall deposit as general revenues the sum of ninety cents ($.90) per two dollars and |
16 | thirty cents ($2.30) of the face value of the stamps. The balance of the tax on the purchase of |
17 | property shall be retained by the municipality collecting the tax. The balance of the tax on the |
18 | transfer with respect to an acquired real estate company, shall be collected by the tax administrator |
19 | and shall be distributed to the municipality where the property for which interest is sold is |
20 | physically located. Provided, however, that in the case of any tax collected by the tax administrator |
21 | with respect to an acquired real estate company where the acquired real estate company owns |
22 | property located in more than one municipality, the proceeds of the tax shall be allocated amongst |
23 | the municipalities in proportion that the assessed value in any such municipality bears to the |
24 | assessed values of all of the real estate owned by the acquired real estate company in Rhode Island. |
25 | (e)(f) For purposes of this section, the term "acquired real estate company" means a real |
26 | estate company that has undergone a change in ownership interest if (1) The change does not affect |
27 | the continuity of the operations of the company; and (2) The change, whether alone or together |
28 | with prior changes has the effect of granting, transferring, assigning, or conveying or vesting, |
29 | transferring directly or indirectly, 50% or more of the total ownership in the company within a |
30 | period of three (3) years. For purposes of the foregoing subsection (e)(2), a grant, transfer, |
31 | assignment, or conveyance or vesting, shall be deemed to have occurred within a period of three |
32 | (3) years of another grant(s), transfer(s), assignment(s), or conveyance(s) or vesting(s) if during the |
33 | period the granting, transferring, assigning, or conveying party provides the receiving party a |
34 | legally binding document granting, transferring, assigning, or conveying or vesting the realty or a |
| LC005036 - Page 3 of 6 |
1 | commitment or option enforceable at a future date to execute the grant, transfer, assignment, or |
2 | conveyance or vesting. |
3 | (f)(g) A real estate company is a corporation, limited liability company, partnership, or |
4 | other legal entity that meets any of the following: |
5 | (1) Is primarily engaged in the business of holding, selling, or leasing real estate, where |
6 | 90% or more of the ownership of the real estate is held by 35 or fewer persons and which company |
7 | either (i) derives 60% or more of its annual gross receipts from the ownership or disposition of real |
8 | estate; or (ii) owns real estate the value of which comprises 90% or more of the value of the entity's |
9 | entire tangible asset holdings exclusive of tangible assets that are fairly transferrable and actively |
10 | traded on an established market; or |
11 | (2) Ninety percent or more of the ownership interest in such entity is held by 35 or fewer |
12 | persons and the entity owns as 90% or more of the fair market value of its assets a direct or indirect |
13 | interest in a real estate company. An indirect ownership interest is an interest in an entity 90% or |
14 | more of which is held by 35 or fewer persons and the purpose of the entity is the ownership of a |
15 | real estate company. |
16 | (g)(h) In the case of a grant, assignment, transfer or conveyance or vesting that results in a |
17 | real estate company becoming an acquired real estate company, the grantor, assignor, transferor, or |
18 | person making the conveyance or causing the vesting, shall file or cause to be filed with the division |
19 | of taxation, at least five (5) days prior to the grant, transfer, assignment, or conveyance or vesting, |
20 | notification of the proposed grant, transfer, assignment, or conveyance or vesting, the price, terms |
21 | and conditions thereof, and the character and location of all of the real estate assets held by the real |
22 | estate company and shall remit the tax imposed and owed pursuant to subsection (a). Any such |
23 | grant, transfer, assignment, or conveyance or vesting which results in a real estate company |
24 | becoming an acquired real estate company shall be fraudulent and void as against the state unless |
25 | the entity notifies the tax administrator in writing of the grant, transfer, assignment, or conveyance |
26 | or vesting as herein required in subsection (g) and has paid the tax as required in subsection (a). |
27 | Upon the payment of the tax by the transferor, the tax administrator shall issue a certificate of the |
28 | payment of the tax which certificate shall be recordable in the land evidence records in each |
29 | municipality in which such real estate company owns real estate. Where the real estate company |
30 | has assets other than interests in real estate located in Rhode Island, the tax shall be based upon the |
31 | assessed value of each parcel of property located in each municipality in the state of Rhode Island. |
32 | Delayed Effective Date. |
33 | P.L. 2018, ch. 39, § 2, and P.L. 2018, ch. 45, § 2 enacted identical amendments to this |
34 | section. |
| LC005036 - Page 4 of 6 |
1 | SECTION 2. This act shall take effect upon passage. |
======== | |
LC005036 | |
======== | |
| LC005036 - Page 5 of 6 |
EXPLANATION | |
BY THE LEGISLATIVE COUNCIL | |
OF | |
A N A C T | |
RELATING TO TAXATION -- REAL ESTATE CONVEYANCE TAX | |
*** | |
1 | This act would tax property not considered a primary residence at a flat rate of five percent |
2 | (5%) of the assess value. |
3 | This act would take effect upon passage. |
======== | |
LC005036 | |
======== | |
| LC005036 - Page 6 of 6 |