The bill amends Chapter 44-5 of the General Laws by introducing a new section, 44-5-89, which establishes a homestead exemption for residential properties. This exemption allows municipalities to annually fix the amount of a homestead exemption, not exceeding twenty percent (20%) of the assessed value of taxable real property used exclusively for residential purposes and improved with a dwelling containing fewer than four (4) units. Municipalities are required to enact ordinances that provide rules and regulations governing eligibility for this exemption.

Additionally, if a property with an exemption is sold or transferred during the year for which the exemption is claimed, municipalities may, upon approval from their city or town council, provide for a proration of the homestead exemption in cases where title passes from those not entitled to claim an exemption to those who are entitled.

Furthermore, municipalities that granted a homestead exemption at a different or higher rate prior to the enactment of this section will not be subject to the limitations imposed by the new law. This provision ensures that existing exemptions are preserved while allowing for the establishment of a standardized exemption across the state. The act is set to take effect immediately upon passage.