Legislation sponsored by Senate Judiciary Committee Chairman Michael J. McCaffrey and House Majority Whip John G. Edwards (D-Dist. 70, Tiverton, Portsmouth) has passed both chambers of the General Assembly.

The legislation would create an exemption from taxation for certain residential property developments that have not been completed or, if completed, have not been sold and occupied. The exemption would not affect taxes on common areas and facilities for residential condominiums. The exemption would expire on Dec. 31, 2021.

The Senate version of the bill (2015-S 0559A), which passed the Senate last week, was approved this week by the House of Representatives. The House version (2015-H 5044) is scheduled to be voted on in the Senate this week.

“One of the economic indicators everyone has been talking about – particularly the governor – has been new home construction,” said McCaffrey. “But building new homes takes time and the levy of property taxes can add up for the developer. This is a good bill that will help encourage the building of new homes by putting off the assessment of those taxes until the property is finished and occupied.”

Under the legislation, new construction on development property would be exempt from the assessment of taxes as long as the owner files an affidavit claiming the exemption with the local tax assessor by Dec. 31 each year. The assessor would then determine if the property on which the new construction is located is development property. If the real property is development property, the assessor would exempt the new construction from the collection of taxes on improvements, until such time as the real property no longer qualifies as development property.

“This legislation will encourage economic activity in the construction industry,” said Whip Edwards. “The economy is starting to turn around, the state’s unemployment rate has dipped below 6 percent, and that’s certainly good news; but things are still lagging in the construction industry, especially in the building of new homes. We’re not seeing the type of construction activity we associate with summer. This bill will be just the shot in the arm the construction industry needs to encourage growth.”

The law would define development property as “real property on which a single family residential dwelling or residential condominium is situated and said single family residential dwelling or residential condominium unit is not occupied, has never been occupied, is not under contract, and is on the market for sale.” It would also include improvements and/or rehabilitation of unoccupied single-family residential dwellings or residential condominiums that the owner purchased out of a foreclosure sale, auction, or from a bank.

The legislation now heads to the governor’s office.