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Rhode Island Tax Now Applies To Short Term Residential Rentals

July 07, 2015

Do you rent property? You could be subject to a new tax on short term residential rentals that begins July 1st of this year.

The Rhode Island General Assembly just recently approved their 2016 budget, which includes a new tax on short term residential rentals. The tax applies to rental periods beginning on or after July 1, 2015 --- thus giving little time to prepare.

What Kinds of Rentals are Subject to This Tax?

Taxes are required to be charged and collected from occupants of the following rentals:

  • Rentals of homes, condominiums and apartments for periods of less than 30 days will be subject to an 8% tax (7% sales tax and 1% local hotel tax).
  • Rentals of rooms situated within a residence, condominium or apartment will be subject to a 13% tax (7% sales tax, 5% state hotel tax, and 1% local hotel tax).

Any Exceptions?

For rented dates within calendar year 2015, the tax will not apply to any short term rentals that were under contract no later than June 30, 2015, even if the rental occupancy occurs between July 1 and December 31, 2015.

Who Collects the Tax?

The residential owner, agent or entity that collects the rent will be the responsible party to collect the tax. They will need to register with and remit the taxes to the RI Division of Taxation. Filers who have seasonal taxable rentals should indicate this on the Business and Registration Application (Division of Taxation Form BAR) which will limit the filings for the seasonal months only.

Separate sales and hotel tax payments will be required to be filed and paid by the 20th of the month following the month of collection. Also, an annual tax reconciliation return filing will be required by January 31 of each year for the previous calendar year.

Please contact us for more information or any questions pertaining to the new tax on short term residential rentals.

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