Rhode Island Implements ‘Taylor Swift Tax’ Ahead of Superstar’s Rumored July 4 Nuptials With Travis Kelce

Amid rampant speculation that pop songstress Taylor Swift and her beau, the Kansas City Chiefs tight end Travis Kelce, will tie the knot at New York City over the Fourth of July weekend, the pop star may also be starting a new chapter with her tax bill.On Wednesday, a new law went into effect in Rhode Island that would impose an extra tax on high-end vacation homes in the Ocean State that sit vacant for more than 183 days a year. The tax, officially known as the “Non-Owner Occupied Property Tax,” has been dubbed the “Taylor Swift tax,” as the singer owns the so-named “High Watch,” a 12,000-square-foot, seaside vacation home at Westerly. The tax is charged at $2.50 for every $500 of assessed value over $1 million. A local TV station, WPRI, reports that the pop singer’s colonial-style mansion has been valued at $28 million, and that her tax bill would increase by roughly $136,000 per year. That amount is on top of existing property taxes.Homeowners may qualify for an exemption if their property is rented for more than 183 days a year, either for long-term tenants or through short-term rentals on sites such as VRBO or Airbnb. Properties rented out on Airbnb pay as much as 14 percent in local and state sales and lodging taxes. Rhode Island lawmakers quietly added the new tax into last year’s budget, without a public hearing on the matter. The head of the Rhode Island Association of Realtors, Michael Pereira, expressed frustration, saying he was “blindsided” by the tax.“People are going to receive bill notifications from the state who actually occupy the property, or perhaps have a rental,” Mr. Pereira told WPRI. “Is there a lot of red tape to prove that you’re innocent and you don’t owe the tax?”Rhode Island’s Division of Taxation identified 22,431 residential properties in the state that are valued at over $1 million, and 8,245 were identified as non-owner occupied. The state predicts that the tax will generate $24.5 million in the first year and $27 million by 2031. The idea of taxing vacant homes has circulated around Rhode Island politics for more than a decade and has received criticism from towns that would be hit the hardest. In 2015, Newport’s City Council voted to reject the idea. And in April, a former Providence mayor, Joseph Paolino, wrote a column on GoLocalProv, criticizing the tax, saying, “A Rhode Island resident thinking about buying a summer home in Matunuck or Portsmouth now has a choice: stay here and pay a new annual penalty — or go to the Cape, Mystic, or New Hampshire and pay nothing extra” Nearby Cape Cod, Massachusetts, Mystic, Connecticut, and the Granite State are popular destinations for Northeastern investors.“And then there’s Newport—one of the true economic engines of our state. For generations, families from New York, Pennsylvania, Delaware, and beyond have made Newport their second home,” Mr. Paolino wrote. “They don’t just visit—they invest. They support local businesses. They fund charities like the Preservation Society, Salve Regina, and organizations that sustain our marine and boat-building industries.”The former mayor warned that second-home owners will leave the state and “take their spending, their philanthropy, their networks” with them. Some self-identified second-homeowners expressed frustration with the new tax in a community submission section of the local newspaper, Newport This Week. One user wrote that his family “scrimped and saved for years” before they bought a vacation home at Newport, and criticized a supporter of the tax who said that it would be “inconsequential to one who can afford a vacation home.”A tax analyst at the Institute on Taxation and Economic Policy, Rita Jefferson, said in a blog post that areas where people own vacation homes “would collapse without the service industry supported by retail workers, restaurant workers, hotel workers, housecleaners, and gardeners who live in these communities year-round.”“Wealthy people who want these vacation locales to continue to exist should be paying their fair share through surtaxes like the Rhode Island tax,” Ms. Jefferson said. Rhode Island is not alone in looking at second homes as a way to generate more income. In May, New York lawmakers approved Mayor Zohran Mamdani’s so-called pied-à-terre tax on nonprimary homes valued at $1 million or more at New York City. The tax is expected to bring in $500 million. Last year, Montana created a new tax rate for non-permanent homes at a rate of 1.9 percent of assessed market value.

Rhode Island Implements ‘Taylor Swift Tax’ Ahead of Superstar’s Rumored July 4 Nuptials With Travis Kelce

Rhode Island Implements ‘Taylor Swift Tax’ Ahead of Superstar’s Rumored July 4 Nuptials With Travis Kelce

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