Tax exemption created for builders restoring blighted, vacant structures

STATE REP. John G. Edwards, D-Tiverton, sponsored a new state law designed to encourage housing construction that also creates tax incentives for builders who want to rehab blighted or vacant structures. / COURTESY R.I. GENERAL ASSEMBLY
STATE REP. John G. Edwards, D-Tiverton, sponsored a new state law designed to encourage housing construction that also creates tax incentives for builders who want to rehab blighted or vacant structures. / COURTESY R.I. GENERAL ASSEMBLY

PROVIDENCE – A new state law designed to encourage housing construction also creates tax incentives for builders who want to restore blighted or vacant structures.
The law creates a tax exemption on improvements made to an unoccupied house or condominiums – bought at a foreclosure sale, auction or from a bank – for up to two years, or until the property is sold.
Sponsored by state Rep. John G. Edwards, D-Tiverton, the House majority whip, the law applies to new housing construction built on speculation, or renovations to housing units that are completed without an owner under contract. It will apply to projects that obtain a building permit after July 1, when the law took effect.
Edwards said the provision allowing the incentive to apply to renovations was added to the bill to help cities including Providence that still have substantial numbers of vacant and abandoned houses. Providence officials recently reported the city has 450 abandoned structures on a registry, but not all vacant properties have been registered.
“They want these properties improved,” Edwards said.
The new state law will act almost like a tax stabilization agreement for builders or renovators. They will pay the local property tax on the existing value, not the improved value, for up to two years, according to Edwards.
The property can’t be built for the owner, or under contract. Similar legislation was rejected three years by former Gov. Lincoln Chafee.
Gov. Gina M. Raimondo signed this year’s version of the bill last week. It was supported by the Rhode Island Builders Association.
“If you offer an incentive like this, the speculative [building] market will come back,” Edwards said.

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