The bill amends Chapter 44-5 of the General Laws by introducing a new section, 44-5-91, which establishes a homestead exemption for residential properties. This exemption allows municipalities to set an annual homestead exemption of up to twenty percent (20%) of the assessed value of taxable real property used exclusively for residential purposes, specifically for dwellings containing fewer than four (4) units. Municipalities are required to enact ordinances that outline the 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 prorate the exemption upon approval from their city or town council. The bill also provides that municipalities that have 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 section. 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.