If you’re renting out your vacation property in Rhode Island for 30 days or less, you’re subject to a series of taxes mandated by the state. Here's a complete breakdown of what you need to know as a short-term rental host:
Applicable Taxes
7% State Sales Tax: Applies to the rental cost for short-term stays of 30 days or less.
1% Local Hotel Tax: Charged in addition to the sales tax.
5% Statewide Hotel Tax: Applies only to individual room rentals (bringing the total tax to 13% for rooms).
If your rental agreement is for more than 30 days or a full calendar month, you are exempt from these taxes, as long as a documented lease or arrangement exists.
Registration Requirements
To operate legally as a host, you need to:
Register with the Rhode Island Division of Taxation: Obtain a sales tax permit by completing the Business Application and Registration (BAR) form.
Pay a $10 Sales Tax Permit Fee annually.
Collect and Remit Taxes: As the host, you're responsible for collecting the sales and hotel taxes from your guests and remitting them to the state.
For monthly rentals, you’ll need to file:
Form RI-8478: For remitting the hotel tax.
Form T-204M: Monthly sales and use tax returns.
These forms must be filed for every month in which you have rentals. If you operate seasonally, you’ll only file for the months you’re active, but annual reconciliation is required in January to ensure all taxes have been properly handled.
Platforms and Independent Hosts
If you use platforms like Airbnb or Vrbo, these companies often collect and remit taxes on your behalf. However, if you rent independently, you must collect and remit the required taxes yourself. This means clearly itemizing the taxes on invoices and ensuring they are paid to the state on time.
Important Deadlines
Taxes are filed in arrears, meaning the filing and payment for each rental period are due by the 20th of the following month. For example, taxes for July rentals are due by August 20.
Annual renewal of the sales tax permit is due by February 1 each year, and annual reconciliation must be completed by January 31.
Additional Considerations
Room Resellers: If you buy and resell rooms (e.g., through bulk booking platforms), you're considered a "room reseller" and must register, collect, and remit taxes based on the full amount charged to the customer.
Hosting Platforms: If you advertise via a hosting platform but handle payments directly, the tax collection responsibility is yours, not the platform’s.
Tax Exemptions
Long-term leases and rentals exceeding 30 consecutive days are exempt from both the sales and hotel taxes, provided a formal lease is in place.
By following these guidelines and staying on top of tax remittance, you ensure that your short-term rental business in Rhode Island remains compliant with state laws.
For more details on registering and tax filing, visit the Rhode Island Division of Taxation website or refer to Form RI-8478 for filing monthly hotel taxes.
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