8% short-term rental tax effective July 1, 2015.
Here are the details:
WHO WILL OWE THE TAX?
- Private Home Owners who rent their homes for fewer than 30 consecutive days will be required to obtain a sales tax permit and collect an 8% tax (7% sales tax plus a 1% hotel tax). Real estate commissions and cleaning fees included as part of the lease are also subject to the tax. Refundable damage deposits are not taxed.
WHO COLLECTS THE TAX?
- Homeowners are responsible for collecting taxes from tenants. Homeowners are also responsible for collecting the tax if their tenants sublet their property (with or without their knowledge).
This is an excerpt of the DRAFT regulation distributed 6/24/15 regarding Agents’ responsibility for tax collection:
CAN I DO ANYTHING TO PREVENT / POSTPONE THE TAX?
- No. But you can express your opinion. Click here to find out who to call: https://sos.ri.gov/vic/
ARE THERE ANY EXEMPTIONS?
- Anyone who signed a contract prior to July 1, 2015 will be exempt no matter when they pay the rent.
- Rental agreements for more than 30 consecutive days or for one full calendar month are exempt.
WHAT ARE THE HOMEOWNER’S REPORTING RESPONSIBILITIES?
- Homeowners who rent their property for fewer than 30 consecutive days will be required to obtain a sales tax permit ($10) and file monthly reports with the State during the months they rent out the property. For example, a home owner who rents a cottage for one week – or even one day – to a tenant in July would be required to file a July return by August 20th.
- Returns are not required for months when no short-term rentals take place.
- An annual return is also required.
WHAT IF I DON’T COMPLY?
- Current RI law states each day a person engages in business without a permit constitutes a separate offense. Non-compliance could result in penalties of up to $5,000 per offense and/or imprisonment for one year.
IF MY TENANT WON’T PAY, CAN I PAY THE TAX FOR HIM/HER?
- No. Owners may not pay taxes for tenants.
HOW CAN I LEARN MORE?
- Call the RI Department of Revenue and request a copy of their tax advisory report explaining procedures and forms.