Moving forward, property owners should take note of new taxes introduced in the recently passed RI FY 2026 budget that impact residential real estate. Whether homeowners are offering short-term vacation rentals, selling their home, or own a non-owner-occupied second property valued over $1 million, new or increased taxes will become a part of their ongoing expenses.

Short-Term Rentals:

Though for years, Rhode Island property owners have managed to stave off the extension of the hotel lodging tax to whole-home and -condos rented for less than 30 days, this year the General Assembly voted to approve the bill. Starting on January 1st, 2026, , whole-homes and -condominiums rented less than 30 days will incur a 5% whole-home tax, in addition to a local hotel tax which will be increased from 1% to 2%.  See more information here.

Residential Conveyance Tax:

Despite hundreds of member letters going to legislators and local, state, and national news outlets sharing REALTORS®’ pleas to forego increases on the conveyance tax on real estate sales, increased conveyance taxes will take effect October 1, 2025. As of October, the conveyance tax on residential real property sales increases from $2.30/$500 to $3.75/500 of the consideration paid.  Additionally, if a home sells in excess of $800,000, an additional $3.75/500 of the portion of the sales price over $800,000 will also be applied.  For details and examples, please see this document from the R.I. Division of Taxation. While we are disappointed by that result, our efforts to make homes affordable will continue. 

Tax on Non-Owner-Occupied Residences Assessed Over $1 Million

Just days before the session ended, the House released a budget that included a new annual sales tax on non-owner-occupied properties assessed at more than $1 million that weren't occupied by the owner(s) or tenants for at least 183 days per year. Amounts over $1 million will be taxed at $2.50/500 beginning July 1, 2026. There was no opportunity for testimony on this bill which passed despite far-reaching media outreach. RIAR will continue to educate legislators about the unintended consequences before the start of the next legislative session.

Download this flyer to explain these tax changes to your customers and clients.