Newport This Week

City Council Approves Tax Tiers for Yearly Rentals

The Newport City Council approved new tax classifications on Nov. 9 that will reduce rates on homeowners who rent out properties long-term, rent from owner-occupied homes, and own multiple long-term rentals.

According to current projections, the new classes will reduce tax rates by about 7 to 10 percent.

“The reason we worked hard to pass this two-tiered system was to allow and encourage landlords to have year-round leases, so more people could have housing,” Councilor Kate Leonard said. “It is a problem in this town.”

The ordinances were adopted unanimously, with an exception for military families.

“If they get transferred, there is no penalty for owners when military tenants to let them out of their leases,” said Leonard.

This section of the new ordinances will also not allow landlords who rent to military school tenants from September through May and then rent short-term during the summer to receive a tax exemption.

“Full year leases in two- to threefamily properties with the landlord occupying one unit will give the landlord a tax break to encourage more housing supply for locals,” said Leonard.

Councilor Jamie Bova explained other changes, including a language change from “taxpayer” to “applicant,” saying she feels there is confusion regarding homeowners vs. rental units in the application process.

City solicitor Christopher Behan further stated that someone who is receiving the lower tax rate on a property that they live in yearround can also receive that rate on another property owned in the city if it is rented out yearly.

“I think that this two-tiered residential tax program will have an impact on our residents,” Bova said. “This is a long time coming.”

She cited the hard work of city staff and the ad hoc Tax Committee, who culled a report after many months. “Their report was substantial and comprehensive,” she said.

Bova said the next step is “ensuring outreach” and enrollment to residents. “I am sure there are many people who don’t know we are implementing this program,” she said.

Leonard said, “The goal was to bring in more units to local people. Many landlords rent their units from September to May, and then [use them as] summer rentals for those three months for big, big dollars.”

She pointed to a landlord who earns $60,000 to $70,000 a month in rent during the summer.

“People don’t understand the impact for people looking for housing here if those landlords are not generous enough to offer those units at fair market value,” she said.

One response to “City Council Approves Tax Tiers for Yearly Rentals”

  1. Linda Kiederer says:

    Wasn’t there going to be a homeowner tax break for people who don’t rent their homes at all? This was called “owner/occupied”. What is the status of that?

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