Bristolians own houses, but they also rent. So you’re shifting the burden from one to the other, and you’re shifting it to the ones that can least afford it.”

Doug Gablinske

The Town of Bristol is moving toward a new tax structure that will increase property taxes on more than 1,400 rental properties in town. Much work remains to be done, but the foundation was laid last month, when the Bristol Town Council authorized a new three-tier tax system that will assess higher taxes on rental properties than on traditional, owner-occupied homes.

Bristol, and with most communities, currently operates with a two-tier system for taxing properties — commercial and residential. Beginning next fiscal year (July 1, 2025), Bristol will have three separate tiers: commercial, owner-occupied (formerly residential), and non-owner-occupied (full-time rentals). Bristol will become just the fifth municipality in Rhode Island to adopt such a system.

The idea for the new tax classification was first introduced to the council in March of 2023. Then, it was pitched as a way to address the housing shortage that was affecting numerous towns across Rhode Island. The new ordinance would target people who rent out their homes on Airbnb or other rental platforms, as well as people who rent their properties to Roger Williams University students.

The town looked toward Middletown, one of the four other towns that have implemented a similar system, as a model. There, non-residents are taxed at a rate of $12.91 per $1,000 of property valuation, compared to residents, who are taxed at a rate of $12.02. Thus, non-resident property owners — landlords who rent their properties full-time — pay 7.5 percent higher property taxes.

According to Bristol Tax Assessor Michelle DiMeo, the town is not looking toward Middletown to determine its own tax rates, just as a model for structuring the system.

To implement the new system, Bristol is likely to adopt an opt-out strategy, meaning properties will be placed into the non-owner-occupied bucket first, until they prove that they actually reside in their home more than six months per year. To be placed in the “owner-occupied” tax group, which is another way of describing the current tax rate for the vast majority of properties, residents will be asked to submit written documentation to the town. Those who do not respond or who cannot prove their residency will be subjected to the higher non-owner-occupied rate.

To apply for an owner-occupied tax rate, the property owner must live in the house for at least six months during the year. If the taxpayer gives misinformation regarding their residence at the house, they could be fined upwards of $1,000. In addition, neither the owner nor the owner’s spouse can receive a similar tax rate in another town on another residence they own, although exceptions will be made for people who are legally separated or divorced.

To qualify for the owner-occupied rate, the residential real estate must consist of no more than five dwelling units. Partial commercial buildings will still be subject to a commercial tax.

At a recent town council meeting, there was some debate over an original plan to base the applications for owner-occupied rates on the voting registry. As a result, a change was added that allowed the applicant to use two different forms of identification, such as a driver's license or passport, in a situation where they are not registered to vote.

According to both DiMeo and Town Administrator Steven Contente, the system is aimed at helping reduce or limit the property tax burden on traditional residential owners. They estimated that 1,400 landlords will be subjected to the higher tax rates. The philosophy is that the landlords pay more, creating a trickle-down effect where the full-time residents pay less than they would have otherwise.

Higher rents in the future?

Some are not pleased with the new system and believe it will only make things worse. The main concern is that the higher taxes will lead to higher rents, which will end up hurting renters, once again fueling a housing problem.

“I think this is an overly complicated ordinance, unnecessarily bureaucratic and burdensome,” said Doug Gablinske, real estate appraiser and former member of the Rhode Island General Assembly. “Bristolians own houses, but they also rent. So you’re shifting the burden from one to the other, and you’re shifting it to the ones that can least afford it.”

Gablinske said this type of ordinance makes sense in a town such as Newport, but not in Bristol, as it is not a highly transient town.

Town Council Chairman Nathan Calouro, however, believes the ordinance will be a net positive for the town. “I picture the people who have lived here a very long time,” he said. “It’s a way to help control the cost for people who owned their properties for a long time and don’t want to leave.” He specified that he does not want to see a massive delta between the tax rates. As for the possibility of rents increasing, he said it’s too early to predict what will happen, especially since they have not even set their new tax rates, which will happen next spring.

Calouro said he expects to get more insight from both renters and homeowners during that time.