Rhode Island vacation rental tax guide
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With a bounty of popular destinations including Newport and Providence, the Ocean State offers ample opportunity for short-term rental (STR) businesses.
But these opportunities come with tax obligations. Like hotel and B&B stays, STR stays in Rhode Island are subject to lodging taxes. Failure to comply with state and local tax laws can result in fines and interest penalties. Tax jurisdictions are increasingly making STR tax compliance a priority, so it’s important to address compliance before tax authorities address it for you.
Avalara MyLodgeTax put together this guide to help you comply with Rhode Island lodging tax laws at the state level. Local jurisdictions may have their own lodging tax rules. For more information on the tax rates and jurisdictions that apply to your rental’s specific location, use our lodging tax lookup tool.
No lodging tax guide is a substitute for professional tax advice. Consider this an asset to help you understand and prioritize your lodging tax questions and concerns. Questions pertaining to specific situations or out-of-the-ordinary conditions are best solved with a certified tax professional familiar with Rhode Island tax laws.
Lodging tax basics
Lodging tax is calculated as a percentage of the cost of your guest’s stay and added to the price on the bill. The guest pays the tax, but the STR operator is responsible for collecting the tax and paying it to the proper tax authority.
What’s the definition of “short-term rental” in Rhode Island?
In Rhode Island, rentals of lodging for 30 consecutive days or fewer are subject to state lodging taxes.
Who’s required to collect and file lodging taxes on short-term rentals in Rhode Island?
If you collect payment from short-term guests renting out a room, apartment, house, or other dwelling, you may be responsible for collecting, filing, and remitting lodging taxes to Rhode Island tax authorities.
Hosting platforms such as Airbnb or Vrbo are required to collect lodging taxes on any rentals they facilitate.
Location is key to compliance
The location of your rental is a crucial piece of information for lodging tax compliance. Your address determines which tax jurisdictions you’re required to report to, which taxes you need to collect, and the appropriate tax rates.
Use our lodging tax lookup tool to get a rate report specific to your Rhode Island rental’s address. The report includes the estimated total tax rate to collect from guests, number of required registrations, number and frequency of returns per year, and minimum number of rented days to qualify as a taxable stay.
It should be noted that tax rates and the rules governing them change frequently. Please consider your tax rate report to be informative rather than authoritative.
Local short-term rental regulations
STR operators in Rhode Island should be aware of the local regulations that apply to them, including rules covering:
- Legality
- Permits, licenses, and registration
- Zoning
- Advertising
- Neighborhood notification
- Building and housing standards
Homeowner associations (HOAs), condominium communities, co-ops, and landlords may also have specific rules regarding vacation rentals. It’s your responsibility to be aware of short-term rental policies that apply to your property.
Registering with tax authorities
In Rhode Island, the person or entity collecting payment for a rental is responsible for lodging tax compliance. If you collect payments from guests directly, you’re legally required to register with the Rhode Island Division of Taxation to receive a sales tax permit. If all of your rentals go through a hosting platform such as Airbnb or Vrbo, you’re not required to register with the state or collect lodging taxes.
You may be required to register with your local tax authority and file local lodging tax returns in addition to state registration and filing.
Business registration
Rhode Island STR hosts who list their properties on STR marketplaces are required to register with the Rhode Island Department of Business Regulation.
Collecting lodging taxes
Once you’ve registered with tax authorities, you’re ready to start collecting lodging taxes, which you’ll add to your guest’s bill when they pay for their stay.
Which taxes apply to Rhode Island short-term rentals?
In Rhode Island, a number of different lodging taxes may apply to your STR, depending on whether you’re renting an entire home or a room. These taxes may include:
| Tax name | File and remit to |
|---|---|
| State sales tax | Rhode Island Division of Taxation |
| State hotel tax (single-room rentals) | Rhode Island Division of Taxation |
| State whole-home rental tax | Rhode Island Division of Taxation |
| Local hotel tax | Rhode Island Division of Taxation |
| Local lodging tax | Local tax authority |
Tax rates
Before you can begin collecting lodging taxes, you need to know the correct rate to charge to avoid compliance issues. Our lodging tax lookup tool can give you a rate report specific to your Rhode Island address.
What charges are taxable?
In Rhode Island, all charges for occupancy are taxable. This includes items such as cleaning fees, pet fees, rollaway bed fees, extra person fees, etc. Cancellation fees aren’t subject to lodging taxes.
What happens when my short-term rental marketplace (such as Airbnb or Vrbo) collects taxes for me?
In Rhode Island, hosting platforms are required to register with the Rhode Island Division of Taxation, collect lodging taxes, and remit them for any transactions they facilitate. If taxes aren’t being collected for you, you’re responsible for collecting and remitting them to tax authorities.
Are guests ever exempt from taxes?
There are situations in which you aren’t required to collect lodging taxes in Rhode Island. For example, a guest who rents for a long term rather than a short term is exempt from lodging taxes.
In Rhode Island, accommodations purchased directly by buyers including the federal government and organizations that are registered as tax-exempt with the Rhode Island Division of Taxation are exempt from short-term lodging taxes.
Filing lodging tax returns
After you’ve collected taxes from your guests, it’s time to file your tax returns with the Rhode Island Division of Taxation. In Rhode Island, you can file returns and pay tax online or manually. The Rhode Island Division of Taxation allows credit card payments, but you may be charged convenience fees for this type of payment.
When do I need to file my returns?
You’ll be assigned a filing frequency and due dates when you register with the tax authority. For filing with the Rhode Island Division of Taxation, due dates are as follows:
| Filing frequency | Due date |
|---|---|
| Monthly | Due the 20th day of the month following the end of the filing period |
I didn’t rent my property during this filing period. Am I still required to file a lodging tax return with the Rhode Island Division of Taxation?
No. Seasonal STR operators must file monthly tax returns only for the months they’re in operation. However, they’re required to file an annual reconciliation return every year in January.
Are there penalties for filing taxes late?
Whether you choose to offer short-term rentals through a marketplace like Airbnb or Vrbo, or directly to guests, you open the door to tax liability at the state and local level. As tax revenue is a major source of local funding, tax authorities are becoming more aggressive in their efforts to identify individuals and businesses violating lodging tax laws. Failure to register with tax authorities and file lodging tax returns in Rhode Island on time may result in late fees, interest payments, and in extreme cases, legal action.
I’ve been offering STRs without collecting lodging tax. What options do I have?
If you’re already operating an STR but not collecting lodging taxes, you may be in violation of Rhode Island tax laws. Take the time to review your legal responsibility (with a tax professional, if necessary) and understand the risks.
STR hosts in Rhode Island may be able to take advantage of a voluntary disclosure agreement (VDA). A VDA offers an opportunity for hosts to proactively disclose prior period tax liabilities in accordance with a binding agreement with the Rhode Island Division of Taxation. VDAs are offered to encourage cooperation with state tax laws and may result in some or all penalty and interest payments being waived.
Are there options for outsourcing lodging tax filing?
Yes. Many STR operators in Rhode Island file several state and local lodging tax returns every year. Filing solutions such as Avalara MyLodgeTax can relieve this burden.
