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In Little Rhody, most people are close to the ocean and have that oceanic feeling around them. There are beautiful views and sunshine frequently, but you also have to deal with chilly weather. As an investor, property manager, or landlord, you're more focused on the outgoing costs, such as Rhode Island property taxes.
Whether you've been an investor for years or have finally found your first property in Rhode Island, you have to know the property tax you can expect to pay. It's a huge part of your financial situation.
This guide will help you learn about Rhode Island property taxes. You'll find out how to calculate the cost, how many times you pay it, the essential dates to keep in mind, and much more. In fact, you'll be prepared to navigate everything!
Understanding Property Tax Bills in Rhode Island
The property taxes in Rhode Island are administered locally, as with most states. Local governments get most of their revenue from them, and Rhode Island property tax also pays for all local government services, such as infrastructure, law enforcement, parks, schools, and more. Towns and cities can set up their own assessment systems and due dates.
Overall, the state collects about $11 billion in revenue each year. Roughly 22.62 percent, or $2.5 billion, comes from property taxes. Likewise, Rhode Island is considered a high-tax state. Your average homeowner will pay $14.78 per $1,000 of home value for property taxes. Plus, the typical Rhode Island property tax bill will be about $4,319.
How Do property taxes and tax rates work in Rhode Island? Generally, property taxes use your market value or the price it would sell for if you sold it. The state requires towns and cities to assess the property once every nine years, updating the assessed value during the third- and sixth-year time frames. This ensures that everything is fairly assessed.
Therefore, the assessed value is similar to the market value. However, Block Island is different; properties are assessed at about 80 percent of the market value. Then, the tax rates are applied to that assessed value to help calculate the Rhode Island property tax bill you pay annually.
The Rhode Island property tax rate is set by the town or city and depends on how much money it needs to offer services. The tax rate is expressed by dollars per $1,000 in assessed value. Therefore, if the city in which your property is located has a tax rate of $20, you'd pay $20 for each $1,000 in assessed value for property taxes.
Assuming the house has the assessed value of about $100,000 and using that aforementioned tax rate, the property tax bill is likely to be $2,000.
The Tax Assessor's Office works hard to set a fair property tax rate for everyone. This is also generally where you will find information about each tax installment.
How Many Times Do You Pay Property Tax a Year in Rhode Island?
If you're thinking of buying property as an investor or landlord, you'll want to look up the property tax information for the home. This means understanding the property tax rate and knowing when to pay.
Typically, property taxes are due when the city or town decides. In most cases, they're due quarterly during the year (four times).
Sometimes, municipalities will mail or hand-deliver the property tax information. However, you can pay online, as well. Likewise, you can go to the tax portal to learn about Rhode Island property tax rates and other data.
You will usually get the tax bill in June after all tax rates have been set. They're paid on the 24th of July, October, January, and April of each year in most counties. However, Burrillville has you pay them on May 18, March 2, December 15, and September 29. Likewise, South Kingstown property taxes are due May 1, February 1, November 1, and August 1.
Consequences of Late Payments
Once you learn about the property tax rate in Rhode Island and determine when to pay them, you must do so on time. If you don't, that overdue amount turns into a lien on your property. The Rhode Island Division of Taxation is your tax collector and also sends out municipal lien certificates as needed. In this case, the property is the collateral for your debt.
Rhode Island requires the local government to sell your home through a special tax sale process, which collects the delinquent taxes. You will be given plenty of warnings before this happens, allowing you to get your home back. Typically, this is one year for reclaiming and redeeming property, even if someone purchases it through a tax sale.
In most cases, you'll be charged interest or penalties, which can be one, 10, two, or three percent.
How to Pay a Rhode Island Property Tax Bill
The easiest way to pay based on your property tax rate in Rhode Island is to go online to the tax portal created by the Division.
If you have a question about your property tax rate or anything else, you can find answers in the portal. However, you may also pay by check. There's a form and instructions with your tax return that will help you determine how to do this.
How Much Is Property Tax in Rhode Island?
It is very difficult to determine how much you'll pay in Rhode Island because the tax rates are all different based on the county. Here is a list of some of the tax rates:
- Barrington - Tax rates of 19.65
- Charlestown - Tax rates of 8.17 percent
- East Providence - Tax rates of 21.86 percent
- Cumberland - Tax rates of 14.99 percent
- Narragansett - Property tax rate of 9.00 percent
- Hopkinton - Personal property tax rate of 18.53 percent
- Foster - Personal property tax rate of 21.96 percent
How Is Property Tax Calculated in Rhode Island?
The formula for calculating property taxes for Rhode Island counties is this: the assessed value multiplied by the personal property tax rate divided by 1000. This gives you the property tax you'll pay.
Let's say the assessed value of a house is $500,000. It's in Providence, which features a personal property tax rate of 24.56. Therefore, you'd pay $12,280 per year.
Everything is formed around the personal property tax rate. Therefore, you must know this before you can do anything else.
How Can I Lower My Rhode Island Property Taxes?
All cities and towns in Rhode Island feature their own property tax dates, but the exemptions you could qualify for vary across the state. For example, homestead exemptions aren't available in every municipality, such as in Providence. Let's learn more:
Homestead Exemption
The homestead exemption protects homeowners who are struggling and risk losing their primary residences through bankruptcy. There are various homestead protection laws in the state, which protect $500,000 of the home's equity against seizure from a creditor. You'll have to contact the local tax assessor's office to learn more.
Senior Exemptions
The senior exemption protects some of your assessed value from taxes. There are various eligibility requirements based on your location. For example, Warwick seniors would get a deduction of $415.20, but Providence seniors only have a maximum of $511. You'll have to talk to the local tax assessor for more information.
Other Exemptions
There's also the veteran's exemption. If you were honorably discharged after serving in the armed forces, you could save $1,000 on property taxes.
Appeal Rhode Island Property Taxes
Another way to save money is by using the property tax appeal method. You'd do this if you felt the valuation didn't truly reflect the market value.
Getting a tax assessment review from the local tax board could lower your property taxes. You must file it within 90 days of the first tax installment. Then, you'll get your tax assessment, determine if it should be appealed, wait for the tax assessor's counterargument, and attend a hearing.
Important Propositions for Real Estate Investors in Rhode Island
If you own a business (and being a landlord or property manager is included), you could save up to $50,000 on property taxes because of this. It's called the Tangible Property Tax Amendment.
Conclusion
Most people feel that investing in real estate can be beneficial, but there are many things to consider, as well. Tax implications are just one of them. However, you learned how often to pay property tax, how to calculate it, and options for lowering your bill. Now, it's time to stay updated on legislative changes and talk to a tax professional if necessary.
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