A quirk in Newport’s property tax system is allowing some condo owners to pay nothing in property taxes — even while collecting thousands of dollars a month in rent.
The issue stems from the city’s two-tier property tax program, which exempts a large portion of a home’s assessed value before taxes are calculated.
Right now, that exemption is about $284,433, roughly 24% of the average value of eligible homes after the last revaluation.
For many smaller condos in Newport — especially one-bedroom units assessed between $225,000 and $275,000 — that exemption wipes out the entire taxable value.
The result?
A $0 property tax bill.
Some of those units are rented year-round. In one example uncovered by Newport Buzz, a condo owner reportedly collects about $2,500 a month in rent — $30,000 a year — while paying no property taxes at all.
Meanwhile, other Newport homeowners are paying thousands.
A home assessed at $500,000 would have roughly $219,000 in taxable value after the exemption, resulting in an annual property tax bill of about $1,572. A home assessed at $700,000 would have about $419,000 taxed, producing a bill of roughly $3,007. And a home assessed at $900,000 would have approximately $619,000 in taxable value, resulting in an annual property tax bill of about $4,444 at Newport’s residential rate of $7.177 per $1,000.
The system was originally designed to ease the burden on homes owned and occupied by full-time residents in a city where property prices have soared.
But critics say the policy appears to contain a major loophole: the tax break applies whether the property is owner-occupied or used as an income-producing rental.
That means some landlords are benefiting from the same tax relief intended for residents — leaving other homeowners to shoulder a larger share of the tax burden.
Newport Buzz has reached out to the City of Newport for comment.
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