'Taylor Swift Tax' is costing Rhode Island families their grandparents' cottages

Rhode Island just started billing regular families thousands of extra dollars a year for owning a house their grandfather bought in the 1930s, and they're calling it the Taylor Swift Tax, nicknamed after the part-time resident of the place.

The tax targets vacant vacation homes, but it's hitting way more than mansions

The law took effect July 1, and it charges $2.50 for every $500 of assessed value above $1 million on any home that isn't a primary residence and doesn't get rented out for at least 183 days a year. Lawmakers built it to squeeze out-of-state owners sitting on empty coastal properties, and Swift's $28 million Watch Hill estate, as per the Westerly land records, will owe roughly $136,000 more a year because of it. But the state flagged more than 8,200 properties as potentially subject to the tax, and plenty of them are modest century-old cottages that just happen to sit on land that's now worth a fortune.

Families who've owned these homes for generations are getting squeezed hardest

An 83-year-old Boston man who shares a 1,900-square-foot cottage in Middletown with his brother's family told the media that their combined property tax bill is about to climb past $34,000 a year, more than 50% higher than before. A different family, whose Watch Hill cottage has been passed down since the 1930s, is looking at a $27,000 annual bill on a home that's basically unrentable in winter because it was never insulated for year-round living.

The money raised doesn't even move the needle on the state budget

Rhode Island expects the tax to bring in about $24.5 million this year. The state's total budget runs $15.2 billion. “An earlier fiscal analysis prepared by the Division of Taxation projected that the tax would generate about $24.5 million in its first year, growing to more than $27 million by 2031, once more people come into compliance. The analysis showed more than 90% of the homes subject to the tax were valued between $1 million and $5 million, 6% up to $10 million, and 1% up to $15 million.

Less than 1% of homes subject to the tax were valued above that amount,” FOX59 reported. Some families are now exploring legal action instead of just paying up.Michael Pereira, president of the Rhode Island Association of Realtors, argues the Taylor Swift branding undersells what's actually a serious financial hit to property owners. Speaking to FOX59, he pointed out that Swift herself is on the hook for an extra tax bill of about $136,000 and said the catchy nickname makes the policy sound lighter than it is. Pereira also told FOX59 that his organization got no advance warning before lawmakers added the tax to last year's state budget in its final stretch, skipping the public hearings that earlier versions of the proposal had gone through. With no lead time, his team couldn't even survey members before it passed.Now his focus has shifted to a more practical worry: whether the state can actually apply the tax consistently across thousands of properties without the process turning into a mess.