Rhode Island’s scenic coastlines, historic towns, and vibrant cultural attractions make it a prime location for short-term rentals on platforms like Airbnb and Vrbo. From summer tourism in Newport to city getaways in Providence, the state attracts a variety of travelers seeking unique accommodations. However, Rhode Island does not enforce a single, all-encompassing short-term rental law. Instead, property owners must address state tax obligations and a patchwork of local regulations that can vary between municipalities.
Below is an overview of what you should consider when operating a short-term rental in the Ocean State, including licensing, lodging taxes, and city-specific guidelines.
Rhode Island’s Definition of a Short-Term Rental
Rhode Island does not apply a singular statutory definition to “short-term rentals.” Many localities classify a stay under 30 days as transient lodging, but individual city or town ordinances may refine that further, often referencing terms like “vacation rental” or “tourist accommodation.” Before listing a property for nightly or weekly stays, hosts should confirm whether their local government treats rentals under 30 days differently from traditional long-term leases, as this categorization can determine tax requirements, permit obligations, and safety regulations.
Starting a Short-Term Rental Business in Rhode Island
Short-term rental hosts in Rhode Island typically face two layers of compliance: state-level taxes and local ordinances. At the state level, owners must verify whether their booking platform collects and remits the required lodging or sales tax. If not, they may have to register with the Rhode Island Division of Taxation. Property owners creating a formal business entity, like an LLC, should also register with the Rhode Island Secretary of State.
Municipal rules often dictate whether a property must undergo safety inspections, obtain a permit, or abide by occupancy limits. Coastal communities, popular for summer tourism, are more likely to have stringent short-term rental guidelines aimed at preserving local character. Checking city or town websites and, if applicable, any homeowners association (HOA) rules is crucial before listing.
Short-Term Rental Licensing Requirement in Rhode Island
Rhode Island does not provide a single, statewide short-term rental license. Local authorities often set their own permit processes, particularly in sought-after destinations. Some municipalities require hosts to apply for a business license or a vacation rental permit, sometimes coupled with inspections for fire safety. Hosts ignoring these local regulations risk fines, listing removals, or other penalties. Staying updated through municipal announcements or city council discussions helps owners keep pace with evolving rules, especially as many locales refine policies in response to housing or neighborhood concerns.
Rhode Island Short-Term Rental Taxes
Short-term rentals in Rhode Island are subject to state and potentially local taxes. The state lodging tax is 5%, and there is an additional statewide sales tax of 7%, applied to the rental charge. In some localities, this can result in a combined tax rate of around 13% for short-term stays. Certain tourism-driven towns may also levy an extra local occupancy or hotel tax on top of these rates. If Airbnb, Vrbo, or another platform does not handle these payments, property owners must register with the Rhode Island Division of Taxation and file returns according to their revenue levels—often monthly or quarterly. Proper recordkeeping is necessary to avoid late or inaccurate tax filings.
Vacation Rental Tax Deductions
Federal tax rules allow Rhode Island short-term rental owners who rent out their properties for more than 14 days a year to deduct a range of expenses, including mortgage interest, property taxes, utilities, maintenance, and depreciation on the house and furnishings. The proportion of deductions typically hinges on the number of rental days versus personal use days. Meticulous logs ensure owners only claim valid expenses and avoid IRS issues. Many hosts consult a tax professional to refine their approach, especially if the property sees both rental and personal use throughout the year.
Short-Term Rental Regulations by Major Locations in Rhode Island
Providence
As the state capital and a college town, Providence attracts short-term guests for events, academic visits, and tourism. The city charges a local hotel tax on top of state lodging and sales taxes, and hosts must adhere to Providence’s building and safety codes. While there is no citywide ban on short-term rentals, neighborhoods with heavy student populations or limited parking may face stricter enforcement or occupant caps. Checking city council updates is wise for any host concerned about potential rule changes.
Newport
Renowned for its Gilded Age mansions and seaside charm, Newport is one of Rhode Island’s most popular tourist destinations. Local authorities typically require vacation rental permits, fire-safety checks, and occupancy limits to maintain the city’s historical ambiance and manage visitor traffic. Lodging taxes are closely monitored, and the combined tax rate on rentals can be over 13%. Hosts ignoring local guidelines can face significant fines, as Newport officials enforce these rules diligently to protect community character and preserve housing availability.
Warwick
Warwick, close to the state’s main airport and near beaches, sees consistent short-term rental demand. While no comprehensive short-term rental ban exists, property owners are expected to adhere to standard building codes and remit lodging taxes. If the platform does not handle the tax portion, the owner registers with the Rhode Island Division of Taxation. HOA regulations in certain subdivisions may impose extra limits on short-term stays, so verifying neighborhood policies is essential.
Cranston
Cranston’s central location near Providence attracts both business and leisure travelers seeking alternatives to hotels. The city primarily focuses on ensuring that short-term rental operators collect all relevant taxes and meet basic safety standards. There is no specialized short-term rental permit at the time of writing, but repeated nuisance complaints from neighbors or unaddressed code violations could trigger scrutiny from city officials. Attending local council meetings or checking the city website can help hosts learn about any future proposals regulating short-term rentals more thoroughly.
Block Island (New Shoreham)
Block Island’s popularity surges in the summer, making short-term rentals a significant part of local tourism. The town of New Shoreham may limit the number of vacation rentals in specific areas or require a permit for non-owner-occupied dwellings. Islanders pay close attention to potential disruptions such as noise, trash, or large events. Lodging taxes generally apply on all short-term bookings, adding to the total cost for guests. Hosts must remain vigilant in following local discussions, as changes to permit caps or rules can happen between busy tourist seasons.
Takeaway
From Newport’s colonial charm to the bustling cultural life in Providence, Rhode Island presents many promising markets for short-term rentals. Yet the state’s decentralized regulatory environment means hosts must confirm local permit procedures, occupancy rules, and safety standards in their respective communities. Collecting Rhode Island’s lodging tax and sales tax—totaling up to roughly 13%—is mandatory unless fully managed by the platform, and owners should confirm that no additional local taxes apply.
As tourist demands evolve and municipalities address housing concerns, short-term rental regulations can change. Keeping tabs on city websites or local council agendas ensures owners remain informed about any new ordinances or heightened enforcement periods. By meeting tax obligations, respecting neighborhood guidelines, and adhering to local licensing (where required), hosts in the Ocean State can operate a successful short-term rental while offering guests a comfortable way to experience all that Rhode Island has to offer.
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