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Middletown reviews two-tier tax changes as residents report confusion and financial harm from residency reclassifications
Summary
Councilors reviewed the town’s two-tier residential tax ordinance that aims to incentivize long-term rentals and disincentivize short-term rentals. Residents said implementation caused unexpected tax reclassification midyear; staff explained the ordinance and exceptions for owner-occupied rentals of one or two bedrooms.
Town of Middletown officials reviewed the town’s recently amended two-tier residential tax ordinance and took public testimony after several full-time residents said they had been reclassified as nonresidents for the tax rate midyear.
Town staff and the solicitor explained the ordinance’s intent is to encourage property owners to make units available for long-term rentals rather than short-term rentals. Under the amendments councilors adopted earlier this year, an owner may be eligible for the owner-occupied (lower) residential tax rate for a property containing up to five dwelling units if the owner occupies one unit as their principal residence for more than six months and any rented units are under written leases of…
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