The bill introduces CHAPTER 72 to Title 44 of the General Laws, establishing a new tax on gains from the sale or exchange of real property in Rhode Island, specifically targeting properties held for six years or less. This tax is supplementary to existing taxes and includes specific exclusions, such as properties sold by nonprofit organizations qualifying under Section 501(c)(3) of the Internal Revenue Code, properties purchased by the state from qualifying organizations, properties conveyed pursuant to court judgments related to marriage, and certain family-related transfers. Additionally, properties sold for conservation or affordable housing purposes may be exempt if held for a minimum of six years.

The bill outlines tax rates based on the duration of property ownership, with higher rates applied to properties held for shorter periods. Buyers are required to withhold ten percent of the sale price for properties held for less than six years and remit this amount to the tax administrator. Sellers must file a return within thirty days of the sale, detailing the tax due and the amount withheld by the buyer. The legislation also defines lease-purchase agreements as installment sales, with tax obligations due within thirty days of each installment payment. Sellers may elect to file tax returns as part of their Rhode Island income tax return for subsequent installments, and no interest will accrue on withholding if annual returns are elected.

The bill establishes penalties for willful tax evasion, including potential imprisonment for up to two years and fines up to $10,000 or five times the amount of tax evaded, whichever is greater. Tax payment forms must clearly state these penalties. Furthermore, a reduced tax rate is provided for sales to qualifying 501(c)(3) organizations aimed at affordable housing, contingent on the property being held for at least six years. The act is set to take effect upon passage.