Understanding Rhode Island’s Real Estate Transfer Tax

What are the types of transfer taxes?

Transfer taxes will typically vary based on local guidelines but can generally be broken down into three categories — state, city, and county, depending on the state. Here’s a quick look at how it works in Rhode Island.

For any real estate transaction that exceeds over $100 in value, the state of Rhode Island changes a Real Estate Conveyance Tax (or real estate transfer tax). This tax will also apply to any property or transfers made by real estate companies.

State transfer taxes

Rhode Island’s state transfer tax is levied at a rate of $2.30 for each $500 (or fraction thereof) of the property’s value at the time of the sale. This also includes any leans or encumbrances that might be remaining on the property.

Additionally, the tax differs for mobile or manufactured homes, coming in at $1.40 per $500 (or a fraction thereof). However, this does not apply to modular homes or mobile/manufactured homes that are outside of a mobile home park. As of 2022, there is an additional $2.30 per $500 tax on the value home, for properties that exceed $800,000 in value.

Other transfer fees

In addition to transfer taxes, there are possible fees to consider, such as from a homeowner’s association or another local neighborhood organization. Again, as these can vary heavily based on location, it’s important to consult a professional.

If you’re selling your home for sale by owner, consulting a professional might help with some of the finer points of the process and give you a better idea of what you can expect.

Are transfer taxes deductible?

Transfer taxes are not tax-deductible on your income tax return. However, they may help reduce the amount you owe in capital gains taxes when selling your home.

The IRS allows sellers to count transfer taxes as selling costs, which means they can deduct these fees from the final sale price when calculating their taxable profit. This can lower the capital gains taxes owed on any profit from the sale.

Transfer tax exemptions

It’s worth knowing that some exemptions to real estate transfer taxes exist. Here are some which you might qualify for in Rhode Island.

• Property sold to secure a debt;
• The sheller is the United States, Rhode Island, or its political subdivisions;
• There is a qualified sale of a mobile or manufactured home community to a resident-owned organization
• The transfer takes place among owners, members, or partners in a real estate company with respect to an affordable housing development where certain conditions are met.

Also, no transfer tax or fee can be imposed by a land trust or municipality upon the acquisition of real estate by Rhode Island or any of its political subdivisions.

Estimating transfer taxes for your home sale

To get a quick estimate of your potential profits from selling your Rhode Island home, try HomeLight’s Net Proceeds Calculator. This tool factors in key expenses like transfer taxes, agent commissions, and closing costs, helping you understand your financial bottom line.

For a more precise estimate, working with a top real estate agent is a smart move. Transfer taxes and other closing costs can sometimes be negotiated, depending on market conditions. Discussing these expenses with your agent early in the process ensures you understand your obligations and explore potential cost-saving opportunities.

​​Editor’s note: This post is for educational purposes only and does not constitute legal or financial advice. Links and mentions of Rhode Island area tax services or attorneys should not be considered endorsements.

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