Time for action is now
By Will Collette
On Tuesday night, Charlestown’s Town Council begins the process that will hopefully lead to a tax break for those of us who make Charlestown our home with a 6 PM “workshop” on granting year-round homeowners a “Homestead Tax Exemption.”Long opposed by the Charlestown Citizens Alliance (CCA) who were defeated in Town Council races in 2022 and 2024, the new Council majority, all aligned with Charlestown Residents United (CRU), resurrected this issue.
Under Council President Deb Carney’s leadership, they won General Assembly approval to enact an ordinance that would provide up to a 10% tax break on the assessments of permanent residents.
Our state Representative Tina Spears (D) and Senator Victoria Gu (D) pushed our bill through to final passage.
The legislation allows Charlestown to implement this tax credit anytime after December 31. Starting now could allow the process to go forward in time to apply to the fiscal year starting July 1, 2026.
Town Tax Assessor Ken Swain and his crew put together a detailed analysis of the costs, benefits and precedents for setting up the tax credit program. Despite being full of numbers, their analysis is remarkably clear. You should check it out.
Fifteen Rhode Island municipalities have a homestead tax credit program on their books, not the 13 erroneously reported by the CCA. These include our coastal cousins in North and South Kingstown, Narragansett, Newport, Middletown and East Greenwich.
To understand how a homestead tax credit works, let’s review how the town calculates YOUR annual property tax bill, delivered every July, starting with the assessed value of your home.
The last revaluation year was 2023 where we learned that Charlestown property values skyrocketed due to the crazy prices being paid by non-residents for waterfront properties. Each of us got new tax assessments that were – as I expressed at the time – shockingly high.
The enormous jump in property assessments led to a dramatic decline in the second factor that determines your property tax bottom line: the tax RATE. The 2023 rate went from $8.17 per $1000 in property value down to $5.74. It has since creeped up to $5.93.
When the dust settled, most Charlestown residents paid pretty much the same bottom line as the year before. My tax bill went up slightly.
Now, as we begin the homestead tax credit process, the Charlestown Citizens Alliance once again seems focused on their singular obsession with the tax RATE:
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| Source: Charlestown Tax Assessor |
“The estimated loss of tax revenue from the reduction in assessment value is $1,272,604.98. This will require an increase in the current tax rate of 29.94 cents. The current rate would then go from $5.93 per $1,000 of assessed value to $6.25… Charlestown currently has one of the lowest tax rates in the state. It is unknown what the long-term impact will be of raising taxes on vacation homes and businesses.”
Why the CCA continues to harp on the rate baffles me. During their ten years in power, the tax rate ranged from $7.44 in 2009 when they came in, to $8.17 when they went out, peaking in 2016 at $10.21.
Swain’s working estimate of $6.25 as the rate after the tax credits are applied is far less than at any time during the CCA’s reign. If you judge how effective the CCA was solely by the tax rate, then the CCA are total losers.![]()
Again, to truly judge a tax measure, you must look at both the rate AND the valuation. Only then can you grasp the bottom line. Fortunately, Ken Swain and his team give us some vital information.![]()
These average tax savings INCLUDE the anticipated 30 cent tax rate increase meaning these are bottom-line savings. I confirmed this with Ken.
Who will benefit?
The General Assembly gave Charlestown broad authority but in its simplest form, all property-owning permanent residents qualify to get up to 10% knocked off their assessment.
Swain estimates the total tax savings of $1,272,604.98 for eligible permanent residents which will be recouped by a 30-cent rate hike paid by all property owners.
There is a total of 3,338 potentially qualifying Charlestown households, depending on how the ordinance is written. An ordinance could set limitations on what types of property qualify.
The single largest bloc are 2,952 single-family residences. Of those, 2,571 are valued at under $1 million and 381 are assessed at $1 million or more, sometimes lots more.
The single largest group of single-family homes are the 1,279 assessed at between $250,000 and $500,000. On average, they stand to net an average tax break of $130.
If the final ordinance stays at 10% per assessed value, people with high-end homes will get bigger tax breaks. I’m sure there will be a lot said about that. Personally, I would favor setting a $1 million cap on the tax break, but I can live with the proposed numbers.
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| Data key: left column is assessed value ranges. Middle column are average estimated tax credits and right column is the number of properties in each price range. |
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Charlestown has come a long way since December 2011 when the Charlestown Citizens Alliance (CCA) and a mob of its wealthy non-resident political backers stomped the first effort toward a homestead tax credit to death.
Claiming it would be unfair and socialistic, and that it would foment class war and force the CCA’s benefactors to leave, it was clear that full-time residents would never see any tax relief as long as the CCA controlled town government.
This time around, the CCA’s opposition is more muted, focused on the tax rate, the tax rate, the tax rate and not the substance.
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| The Taylor Swift Tax rates |
Plus, the CCA no longer controls new town government. Remember that when you vote in December's special election.The state of Rhode Island recognized the impact of wealthy folks paying huge sums for coastal properties by just enacting the “Taylor Swift Tax.” That imposes a substantial tax levy as shown in this table:
They can afford it. Because non-residents have come to dominant Rhode Island’s housing market, especially in South County, the prices of real estate have climbed to the point where you can’t buy unless you’re wealthy.
Johnny Sheil of Mott & Chace Sotheby’s International said in an interview on GoLocalLIVE. “Right now, we have 16 deals pending and I would say it is 50% [out-of-state buyers.]”… "I would say [that] other 50% — the out-of-staters — many of them are just trying to find a second home, maybe an investment property of some sort, just to kind of park some money in.”
Patch reported similar findings:
"Roughly one in four residential sales involved buyers from other states in 2024, and those buyers accounted for an outsized share of high-end transactions," the institute said, identifying out-of-towners as the purchasers in about 42% of sales exceeding $1 million.
"That external demand has amplified already-tight supply, pushed up median prices and rents, and concentrated competitive bidding in coastal towns, Providence-area neighborhoods and desirable suburbs," the institute said, noting those weren't the only areas affected, as "external demand is concentrated in the upper tiers but meaningfully present across the market."
That final point about how non-resident home-buying is spread across the market is borne out by Charlestown home sales. While virtually every million-dollar plus residence has been bought by non-residents, so have homes in other price ranges.
One final note about Charlestown real estate data is that just about every recent seller got more than their home’s assessed value not just the mega-million properties. In 2013, I scoffed at the high assessments that came out of the town revaluation, expressing my doubt that anyone other than shoreline mansion owners would be able to sell at their assessed value.
I was wrong, though in a way I was also right. Every recent record of sale I searched, regardless of price, showed the sales price was higher than assessed value. Who knows how long the bubble will last, but for now, it’s a sellers’ market.
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