Providence Owner Occupancy

8 Replies

@Christian Scully I'm not sure I understand your question correctly, since it seems like, almost by definition, a second home would not be an owner's primary residence.

If you're asking for purposes of the lower owner-occupied tax rate in Providence, the language in the Providence Declaration for Owner-Occupied Tax Rate says, "my above described residence in the city of Providence constitutes my predominant and principle home. I intend to continue it to be permanently as such."

If you mean something else, could you give an example?

You can only have one owner occupied home. I would assume that you would need to live there at least 183 days a year. You can have vacation homes and even if you never rent them out, the vacation home would not be classified as owner occupied.

Is that where you vote from? Do you use that as an address to pay your taxes?

I'm anticipating the coming issues with the new Airbnb rules in Providence and how it will impact future purchases. They are not going to allow non-owner occupied short term rentals. My wife and I are considering buying a new property outside of the city to move into. I am trying to figure out a solution where we don't have to give up a significant amount of income by making the move. Maybe making our current house an actual B & B? 

@Christian Scully I could be misunderstanding you, but it sounds like you're trying to find a way to have your cake (living outside of Providence) and eat it too (still have an Airbnb even after the new owner-occupied rules).

I'm guessing that there are people who will try to do that, just like some people claim that they don't have a car or it's housed in a different city, but they actually live (and have a car in) Providence - to avoid the higher Providence car tax.

Some people will probably find a way to get away with it, but some percentage might get caught. And a smaller percentage will be made an example out of. So it's up to you whether you want to roll the dice.

If I understand your last question, you're asking about turning it into an "actual B&B", then I think you're getting into a whole other area, since you'd essentially be changing the house into a business (full time B&B). That might require a zoning change/permission, and your tax rate might change to be even worse than a non-owner-occupied residential rate (36.70/1000 for commercial/business property vs. 31.96/1000 for non-OO residential; using 2018 property tax rate #s here).

If that's what you're asking, you'd want to do a serious analysis on whether it would be better to do that than just keep it as a regular non-OO monthly long-term rental. It might, if the short-term rental rates are so much higher than long-term, but you might also find that you'd then fall under a new set of regulations for hotels or rooming houses, which might have some unanticipated complexities/costs. So it's something to try to understand before you commit to that course.

You could also sell the current house and try to find one in Providence for Airbnb in a zone which is not R-1A, R-1, R-2 or R-3, since that is apparently the set of zones that the new ordinance will apply to. If you want to find out what zone a specific property is in, the easiest way is to look it up in the GIS map section of the Providence website.

(There is a Zoning field in the MLS, but it's not filled out consistently so it would be hard to set up a reliable search to find properties using that field - you'd probably have to draw, or have your agent draw, a map section around the zone you want to target.)

I just wanted to say that this new ordinance is typical providence grand standing and virtue signaling.  There’s no “investors” buying a bunch of worn out 2 and 3 units and airbnbing them full time.  I do however have a tenant who does this full time in one of my 5 bed 2nd/3rd floor townhouses and it’s been a win/win for the both of us.

@Michael Scott I’ve actually had coffee with a couple different local investors in the past six months who wanted to do exactly that: Buy additional multi family properties to do more AirBnb on all the units. They basically had success doing it with with one property and wanted to expand/repeat the model.

I also attended a public discussion about some of the proposed ordinances on short term rentals (and student rentals), so the city definitely did some homework before bringing this to the table.

The city is run by a bunch of monkeys and that’s saying something coming from Boston.  Did they also do their homework before raising property taxes to fund Elorza’s mission to provide $50K of washing machines to the local high schools?  

Go to Airbnb right now and see who the most successful super hosts are.  Hint they’re not investors hiring illegal Guatemalans to change sheets after every guest.

You can only get the owner occupied tax credit for one property. If you own a multi, they will only apply the credit to the occupied unit as opposed to the entire building. Getting an entire second property, especially in this city could prove difficult. It’s not worth rolling the dice. The one person you never want to go to battle with is the tax man. As much as nobody wants to do it, pay the correct taxes and move on. There are a million other investments that you can invest in to make up the shortfall. 

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