A Westerly second home assessed above $1 million can't close the way it would have last year. Rhode Island's Division of Taxation now tells the seller of a property subject to the Non-Owner Occupied Property Tax to request a Certificate of No Tax Due at least ten business days before the transfer date. The certificate shows that the tax for the current year, all prior years and the year tied to the sale has been paid, or that none is due. That one document changes how a closing timeline is built in Watch Hill, Weekapaug, Shelter Harbor and the higher-value pockets of Charlestown.
The certificate is only the visible part. The tax bills a year behind how the house was used. So when a sale happens, the closing date, more than the price, decides which party owns the next bill.
The bill describes last year's house
The tax took effect July 1, 2026. It applies to residential property assessed above $1 million that the owner did not occupy as a primary residence for 183 days or more. The rate is $2.50 for every $500 of assessed value above the $1 million threshold, which works out to half a percent of the excess. On a home assessed at $3.6 million, that is $13,000 a year on the $2.6 million above the line.
The tax runs on two calendars. The tax year is the period the bill covers, and the first one runs July 1, 2026 through June 30, 2027. The privilege year is the period whose occupancy decides whether any tax is owed, and the first one ran July 1, 2025 through June 30, 2026. The first bills, which the Division calls Non-Owner Occupied Property Tax Assessment Notices, went out in July. The first installment was due September 15, 2026, and later installments fall on December 15, March 15 and June 15.
So every bill reflects the previous year's use of the house. A family that used its Westerly cottage as a summer place in 2025 and 2026 gets the 2026–2027 bill whether or not it still owns the cottage in 2027. Once a house can change hands between the year it was used and the year it is billed, someone has to decide who pays. The regulation decides it by date.
December 30 is the hinge
The Division's regulation, effective June 28, 2026, sorts responsibility by when in the privilege year a transfer closes.
| Closing falls between | Seller is responsible for | Buyer is responsible for |
|---|---|---|
| July 1 and December 29 | Prior and current tax years | The privilege year in which the sale closes, which drives the following tax year |
| December 30 and June 30 | Prior and current tax years, plus the privilege year in which the sale closes | Tax years beginning the July after that |
The regulation's own examples show the difference. For a $1.3 million property transferred October 13, 2027, the seller covers any tax through June 30, 2028, and the buyer is responsible beginning with the tax year starting July 1, 2028. For a $2.6 million property transferred May 22, 2027, the seller is responsible for all applicable years through June 30, 2028, and the regulation directs the seller to pay any tax due in full before closing.
December 30 falls at the midpoint of a July-to-June privilege year. A buyer who closes in the fall still owns the house for more than half of that privilege year. That buyer's own use, whether as a primary residence or as a qualifying rental, decides whether tax is owed for it. A buyer who closes in the winter or spring owns the house for less than half the year, so that year stays with the seller.
The rule already applied in the first transition year. Transfers between July 1 and December 29, 2025 put the first privilege year on the buyer. Transfers between December 30, 2025 and June 30, 2026 put it on the seller. Responsibility is also fixed to ownership on a set date. Under the regulation, the owner on July 1 of a tax year is responsible for making sure that year's tax is paid.
For a Westerly or Charlestown second home under contract this fall, this gives the closing date a value it didn't have a year ago. A purchase and sale agreement that slips from mid-December into early January moves a full privilege year of potential liability from buyer to seller.
How the certificate shapes the closing schedule
Since the seller carries the current year and everything before it, the regulation puts the seller in charge of the paperwork. A transfer of a property assessed above $1 million now involves these steps:
- The seller contacts the Division of Taxation at least ten business days before the transfer date to request a Certificate of No Tax Due.
- Any tax due for the current tax year, prior years and, for a December 30 to June 30 closing, the year tied to the transfer is paid in full before the closing.
- The buyer takes on responsibility under the split in the table above, based on how the buyer uses the property from the closing date forward.
The certificate covers the full year, not just the installments that have come due. The regulation's examples tell the seller to pay in full before closing, so a seller closing this winter would settle the remaining balance of the year before closing rather than on the March 15 and June 15 installment dates. Late payment adds interest. If an unpaid amount is due to negligence or intentional disregard of the law, a 10% penalty applies. After 30 days of delinquency, the tax administrator may also take the amount from funds another state agency owes the taxpayer.
Whether any tax is owed depends on records
The December 30 split decides who is responsible. Whether there is anything to pay depends on how the house was used, and the regulation is specific about what counts.
Owner occupancy means at least 183 days in the privilege year. The days don't need to be consecutive, and residency is generally supported by a Rhode Island resident income tax return, a driver's license and similar official records. Rental exemptions cover long-term rentals under a written lease subject to the Residential Landlord and Tenant Act. They also cover short-term rentals that are subject to sales, hotel or whole-home short-term rental tax. Days in the two rental categories can be added together.
Owner days and rental days can't be added together. The regulation's own example shows it:
The owner of a Providence condominium unit resides at the property for one hundred sixty (160) days from July 1, 2025 to June 30, 2026. The owner then rents the unit as a short-term rental for twenty (20) days and to a tenant with a written rental agreement for sixty (60) days during the same privilege year. The property would not qualify for an exemption to the tax.
The regulation's Narragansett example does qualify. It is a seasonal home rented short-term for 60 days and to tenants under a written agreement for 123 days, for exactly 183 rental days. Owners are required to keep leases, rent payment records, bank statements, utility bills and other residency records for three years after the end of the tax year, in electronic form available for inspection.
The day count has one wording gap. The statute's rental exemption says "more than" 183 days. The Division's regulation and FAQ apply the threshold as 183 days or more. In a sale, these records travel with the deal. A seller whose house was rented 190 days in the year before the sale has a clean answer for the certificate request. A seller whose house sits near the line, or whose use mixed family stays with rentals, may not.
A larger group of owners is affected than the nickname suggests. In Boston.com's August 2026 reporting, Valerie Uccellani described her family's unheated Shelter Harbor cottage, built around 1909 and now assessed at $3.6 million. She told the outlet, "To call it a 'Taylor Swift tax' or a 'mansion tax' I actually think is an unhelpful popular reference … it misleads people as to who is subject to this tax." The same report noted that state guidance did not resolve how occupancy is counted when a property has multiple owners. For cottages owned by siblings or held across generations, that question sits close to the closing table.
Westerly's assessment calendar sets the size of the bill
The town sets the value the tax is figured on. Municipal assessors decide residential classification and assessed value, and the Division bills, reviews exemption records and collects. The first tax year uses the town assessment as of December 31, 2024.
In Westerly, that date matches the town's most recent statistical update. An April 15, 2026 Town of Westerly revaluation RFP lists the last full revaluation as effective December 31, 2018, the latest statistical update as December 31, 2024, and the next town-wide revaluation as of December 31, 2027. Charlestown's 2025 tax roll uses the same December 31, 2024 assessment date. For a Westerly buyer working out a likely bill several years out, the 2027 revaluation is the next point where the base can move.
There is also a process for disputes. The regulation says an owner appealing an assessment with the town still pays the non-owner occupied tax on the current assessed value and files a refund claim at the time of payment. The Division adjusts the tax once the appeals are resolved. Hearings before the Division address only the tax, not the assessment, and must be requested in writing within 30 days of the notice. All proceeds go to the state's Low-Income Housing Tax Credit Fund, not to the town where the home sits.
The lawsuit hasn't changed the dates
On August 19, 2026, property owners represented by Hinckley Allen filed a constitutional challenge in Newport County Superior Court. The case is No. NC-2026-0353. It names the state, the Division of Taxation and Tax Administrator Neena Savage, and it asks for declaratory and injunctive relief. According to the South County Star, the plaintiffs include owners of 30 Westerly properties, one in Charlestown, two in South Kingstown and two in Narragansett.
As of early October, the coverage reviewed for this post reports no ruling and no order pausing collection. The Brown Daily Herald reported on October 5 that a September 30 Division review counted 8,189 properties subject to the tax, down from 8,217 in July. Department of Revenue spokesperson Paul Grimaldi told the paper that "taxpayers have generally been responsive and worked with the Division of Taxation team to resolve issues." For a closing scheduled this fall or winter, the certificate, the December 30 split and the installment dates all still apply.
Signs of market impact are early. In WPRI's July 1 report, Rhode Island Association of Realtors president Michael Pereira said it was too early to tie market trends to the tax. He cited statewide sales above $1 million up 8% year over year and sales below $1 million down 3%.
Questions that come up at the contract stage
Does the buyer of a Westerly second home owe anything for the year before the purchase?
Under the regulation, prior tax years stay with the seller regardless of the closing date. That is why the certificate is requested before the transfer.
What happens if no bill arrives?
The Division has said owners don't file a return and are billed from available records. Owners remain responsible for the tax even if no notice arrives.
Can a family's personal use and rental days be combined?
No. The regulation's Providence condominium example shows that owner days and rental days are counted separately.
Is the tax paused while the lawsuit is pending?
None of the sources reviewed through early October 2026 report a court order pausing collection.
If you own a Westerly or Charlestown second home and are weighing a sale in the next year, the closing date now affects who carries the tax. Robert Rutley and The Blackstone Team can map where your timeline falls against the December 30 line, coordinate early with your closing attorney on the Certificate of No Tax Due, and put together a Concierge Home Valuation with this new cost built into the analysis.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
