Rhode Island Property Owners Challenged New Home Tax

Owners of luxury properties are suing the state to halt a levy on homes valued over $1 million.

Updated on Sept. 22, 2026 in Taxes

Bold flat-color editorial illustration showing a geometric architectural roof silhouette, evoking Rhode Island's high-value property tax legal dispute. — Forty Rhode Island property owners have filed a lawsuit in Newport County Superior Court to challenge a state tax on second homes valued over $1 million. AI Illustration. Upload story photo >

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In August, forty Rhode Island property owners filed a lawsuit in Newport County Superior Court challenging a tax on second homes that took effect July 1, 2026. The plaintiffs are seeking to block further enforcement of the levy and obtain refunds for payments already collected.

Why it matters

The tax is intended to generate $37 million to fund low-income tax credits for affordable housing developments across Rhode Island. For property owners, this law directly increases the cost of holding non-owner-occupied residences valued above $1 million.

The tax rate is $5 per $1,000 of assessed value on properties over $1 million, with the state projecting total revenue of $37 million. This levy specifically targets homes not occupied by the owner for at least 183 days annually.

The players

Newport County Superior Court

The judicial body currently presiding over the legal challenge brought by property owners.

The details

The tax applies to residential properties assessed at more than $1 million that fail to meet the 183-day annual owner-occupancy threshold. Homeowners must satisfy this obligation through quarterly installment payments. Properties that are occupied for at least 183 days via either short-term or long-term lease agreements are currently exempt from the levy.

The tax scheme was passed into law in 2025.
The tax took effect on July 1, 2026.
The lawsuit was filed in August 2026.

Money Landscape

This litigation highlights the ongoing tension between state efforts to generate revenue for affordable housing and the financial burdens placed on luxury property owners. The legal outcome will determine whether this new revenue stream for state housing credits remains viable in its current form.

Homeowners with properties valued over $1 million should track the court's upcoming rulings, as they may impact the requirement to make future quarterly tax payments. Consult with a qualified tax professional to evaluate how the 183-day occupancy rule applies to your specific property status.

The takeaway

The lawsuit creates uncertainty regarding the long-term status of this new property tax. Property owners should continue to monitor local judicial announcements regarding the court's decision to either enforce or stay the collection of these quarterly payments.