Homestead Exemption in Providence RI – How it works
We get so many questions about how the Homestead Exemption works in Providence RI, that I thought it would be helpful to explain it in a post.
So how does it work?
The tax rate in Providence for someone that does not live in a home as a “primary residence” is $30.38 per thousand of assessed value.
If by, December 31, you are living in the house AND SUBMIT AND APPLICATION TO THE CITY, then the rate is cut in half to 15.19 per thousand of assessed value. This is called the HOMESTEAD EXEMPTION in Providence RI.
So, for example, let’s say a property is assessed at 400,0000 by the city of Providence.
If it is owner occupied, there is a homestead exemption, so the tax is calculated at (400,000 /1000 =400) X 15.19 or $6076 per year in tax.
If it is NON-owner occupied, the is NO homestead tax exemption, so the tax is calculated at (400,000/1000 =400) X 30.38 for a whopping $12,152 per year in property tax.
The city says that the owner occupant must own the property by Dec 31 of the PRIOR tax year to qualify for a homestead exemption for the next year 2011. Then the homestead exemption is in effect for the full tax year 2011.
Here is where is is a bit confusing:
1. The Homestead exemption runs with the property, not the owner. So for example, let’s say you purchased a property in February from an owner that is occupying the property, and has the homestead exemption. But in this case, instead of living there, you intend to rent the property out to a tenant. The tax for 2011 would be billed at the owner-occupied rate (because the person you bought it from had the homestead exemption in place, so as an INVESTOR/NON-OWNER OCCUPANT you would reap the benefit of lower tax for the calendar year 2011. Your bill would rise to the higher level in 2012 however.
2. Conversely, let’s say you purchase the a property which is vacant (non-owner occupied or no exemption) in February 2011. Then you will be penalized by the fact that there was no owner occupant in place as of Dec 31, 2010. You will pay the high taxes (same as an investor/non-owner occupant) until you apply for the homestead exemption and the property qualifies in 2012.
3. If you are living in and own such a property for example, as of December 31, 2010, then for 2011, you will get the lower rate, starting in 2011.
4. If you purchase a property from an owner occupant in February, and you live in the property as an owner occupant, than you will have the lower taxes automatically. BUT YOU MUST APPLY yourself for the homestead exemption at a pre-determined time by the city (usually March 15th). To use an example, if a condo is owner-occupied right now, the taxes would continue to be lower in 2011 no matter when in 2011 you purchase.
As an important note, if you are using Zillow.com and Trulia.com to search, the taxes NEVER reflect the homestead exemption. Those sites calculate the tax only as a NON-OWNER OCCUPANT, so keep that in mind when figuring out what your actual taxes will be.
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April 11, 2011 at 9:47 pm, Bernard said:
Thanks a lot for making the effort to describe the terminlogy to the novices!
April 12, 2011 at 5:20 am, aluminum composite panelling said:
Very informative and trustworthy. Please keep updating with great posts like this one.
October 05, 2011 at 12:46 pm, Anthony Demings said:
Presently, I own a 3 story building with a 2 bedroom unit on second and 3rd floor. and a commercial coffee house (wich I also own and operate on the first floor .
I am owner occupied and live on the 3rd floor.
Presently I get less than 50% homestead because im told the building is mixed use.
I am thinking of closing my business and occupying the
first floor as my residence.
The question is…..can I now apply and receive a full 50% homestead tax credit on my building.
respectfully submitted
tony
October 05, 2011 at 1:02 pm, ccwall said:
If the property is mixed use, then you will not qualify for a full homestead exemption even if you close the shop and move in to the first floor. The mixed use classification will prevent this with the city. I would call and ask the tax department what it would take to have the property reclassified into residential use only to see if this is a possibility. Good luck!
February 09, 2012 at 8:28 pm, Jean said:
I just received my Homestead Exemption Eligibility Form and they want to know not only if I own a car and give them the year,made,model,Own or Lease and date first registered but they all so want any other people who lives in my one family house as well. My question is WHY and what right to they have to know about anyone else but me who pays the mortgage,taxes,and insurance on the house. The letter state: beginning this year, Providence residents must demonstrate that they register their vehicles at their address in order to qualify for the homestead exemption. If a person has at lease one motor vehicle registerd in Providence it will be presumed taht the person is eligible for the exemption and this comes for the Office of Tax Assessor. What are we, doing the job of the car tax assessor by given other people’s name, make,model and so on. So they can find them if they don’t paid their car tax. This is my house and they should only need my information and no one else. Is the right of privacy being violent here?