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Rhode Island faces lawsuit over tax on high-value second homes
The challenge targets a July 1 tax that adds $5 per $1,000 of assessed value for second homes above $1 million, arguing it improperly targets out-of-state owners.
HousingWire reports that law firm Hinckley Allen has filed suit in Newport Superior Court on behalf of more than 40 Rhode Island homeowners, challenging a new state tax on second homes valued above $1 million.
The measure, which took effect July 1, imposes an additional surcharge of $5 per $1,000 of assessed value on qualifying properties, on top of existing property taxes. Plaintiffs argue the tax is unconstitutional and unfair because it selectively targets second-home owners, particularly out-of-state residents who cannot vote in Rhode Island.
Supporters of the tax say wealthy second-home owners increase community costs, require more municipal services, and should contribute more. Plaintiffs counter that second-home owners often consume fewer municipal services, maintain their properties, and contribute positively to local property values.
According to the Rhode Island Division of Taxation, as of May the state had identified 22,431 residential properties with assessed values above $1 million, including 8,245 that are non-owner-occupied and may be subject to the new tax, WPRI reported. Hinckley Allen’s lead attorney said the tax could also discourage investment and push some owners and business operators to seek opportunities elsewhere.