S 2808Property

Taxation - Levy and Assessment of Local Taxes - Tax Deferral Program

Qualified seniors and disabled residents can defer property taxes on their homes until death or sale, with 6% annual interest.

Held for study

Population
Affected

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Introduced Mar 4, 2026Committee Senate Finance

Plain-English Summary

This legislation establishes a statewide property tax deferral program for Rhode Island residents who are senior citizens (62 and older), totally disabled citizens, or totally disabled veterans. Qualifying homeowners can delay paying property taxes on their primary residence until they die, sell the home, or transfer the title. The deferred taxes accrue interest at a rate of 6% annually and become a lien on the property. To participate, homeowners must have at least 20% equity in their home, cannot have a reverse mortgage, and cannot pay taxes through an escrow account. The state will appropriate $2 million annually starting in 2027 to fund the program.

For younger readers

This new rule helps older people and people with disabilities who own their own homes. Sometimes, paying taxes to the town costs a lot of money. This plan allows them to wait to pay those taxes later. Instead of paying right now, they promise to pay the money when they sell the house or after they pass away. The town will charge a fee called interest for waiting. This helps people stay in their homes without worrying about a big tax bill today. The state government is setting aside money to help make this work.

Who & Where It Applies

Impacted groups

Senior Citizens (62+)Disabled CitizensDisabled VeteransMunicipal Tax CollectorsHeirs of Property Owners

Impacted communities

All

Constitutional & Fiscal Check

None Likely

Estimated cost

$1.28

Estimated revenue

Amount unknown

Bill Analysis

Both viewpoints

For Progressives

Provides a crucial financial safety net for low-income seniors and disabled individuals, allowing them to age in place and avoiding displacement due to rising housing costs.
Reduces immediate economic pressure on vulnerable populations living on fixed incomes, addressing the issue of residents being "house rich but cash poor."
Utilizes state resources to support community stability, potentially preventing homelessness or the forced sale of family assets among disadvantaged groups.
The 6% interest rate acts as a regressive penalty that erodes generational wealth, reducing the value of assets passed down to heirs of lower-income families.
Excludes the most financially precarious homeowners—those with less than 20% equity or those relying on reverse mortgages—leaving the poorest without access to relief.
The $2 million annual cap may be insufficient to meet demand, potentially creating an inequitable system where relief is rationed rather than guaranteed to all who need it.

For Conservatives

Protects private property rights by offering a mechanism for homeowners to avoid foreclosure or forced sales due to tax burdens without a direct government handout.
Ensures fiscal responsibility by requiring that all deferred taxes be repaid with interest, meaning the taxpayer eventually meets their obligation to the government.
Requires participants to have significant equity (20%) in their homes, ensuring that those utilizing the benefit have a vested financial stake in the property.
Increases state government spending by mandating a $2 million annual appropriation, transferring a local tax burden onto the general state taxpayer base.
Expands government bureaucracy by requiring the General Treasurer's office to administer a new program and interfere in local municipal tax collection.
Creates a complex system of government liens on private property, potentially complicating real estate markets and estate settlements.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 33 additions

SECTION 1. Chapter 44-5 of the General Laws entitled "Levy and Assessment of Local Taxes" is hereby amended by adding thereto the following section: 44-5-20.13.2. Statewide deferment of payment of tax for qualified senior citizens, disabled citizens and disabled veterans.

(a) The payment of property taxes on a single-family dwelling, including manufactured homes, owned and occupied by a senior citizen, disabled citizen or disabled veteran may be deferred until the property is disposed by reason of death of all qualified owners, or by reason of transfer or conveyance; provided however, that any taxes so deferred shall constitute a lien against the real estate. Interest, in an amount of six percent (6%) annually, shall accrue during said deferral period and shall be added to the final tax bill. The city or town shall file a written notice of the lien in its land evidence records.

(b) For the purposes of this section the following definitions shall apply:

(1) “Senior citizen” means any resident who is sixty-two (62) years of age or older.

(2) “Disabled citizen” means a resident who has been determined to be totally disabled by the United States Social Security Administration.

(3) “Disabled veteran” means a resident who is a veteran, and has been determined to be totally disabled by the United States Veterans Administration. (c)(1) Single-family dwellings including manufactured homes, with reverse mortgages, shall not be eligible for the deferment of property taxes.

(2) Single-family dwellings including manufactured homes with less than twenty percent (20%) equity in the home shall not be eligible for this deferment of property taxes.

(d) The State of Rhode Island general treasurer's office shall have authority to establish the requirements, and application and/or verification procedures for municipalities to avail themselves of the benefit of the deferment provided in this section.

(e) If, following the granting of a deferral, a tax assessor determines that an owner who applied and was granted a deferral of property taxes did not file the claim in good faith, the owner shall be assessed a delinquency penalty for the nonpayment of the deferred taxes.

(f) The tax collector of each city or town shall certify to the director of finance on or before the end of business on January 31, the total amount of supplemental roll property tax deferral claims submitted pursuant to this section.

(g) This section does not apply to property taxes paid through escrow accounts.

(h) For the fiscal year 2027 and thereafter, the State of Rhode Island shall appropriate two million dollars ($2,000,000) for the purpose of funding the deferments provided in this section.

(i) The funds appropriated under this section shall be administered by the office of the general treasurer.

SECTION 2. This act shall take effect upon passage.