Rhode Island Short-Term Rental Regulation: A Guide For Airbnb Hosts

Starting a Short-Term Rental Business in Rhode Island

Short-term rentals have become increasingly popular in Rhode Island, offering visitors unique accommodations and property owners an opportunity to generate additional income. However, operating a short-term rental in the Ocean State comes with specific regulations and requirements that hosts must follow.

To start a short-term rental business in Rhode Island, property owners must first register their rental with the Rhode Island Department of Business Regulation. This registration is mandatory for all properties offered for rent for periods of less than 30 nights, including those listed on platforms like Airbnb and VRBO. The registration is valid for two calendar years and must be renewed to continue operating legally.

One of the key aspects of Rhode Island's short-term rental regulations is the requirement for hosting platforms to include state business registration numbers in all listings. This measure, implemented in 2024, aims to ensure compliance and transparency in the short-term rental market. Platforms are also required to collect and remit the state hotel tax on applicable properties, although this tax does not apply to whole-home rentals.

In addition to state-level regulations, short-term rental operators must also comply with local ordinances, which can vary significantly between municipalities. For example, in Providence, the regulations differ based on zoning. In R1, R1A, R2, and R3 zones, only owner-occupied dwellings can be used as short-term rentals. This includes allowing owner-occupants in multi-family dwellings to use their spare apartments for short-term rentals. In all other zones where residences are allowed, dwellings can be used as short-term rentals without the owner-occupancy requirement.

Newport has its own set of regulations for short-term rentals. Property owners in Newport must register their rentals as Transient Guest Facilities with the City Clerk's office. This process involves reviews by the Zoning, Building, and Fire departments to ensure compliance with local laws and safety standards. Newport also has specific parking requirements, typically mandating one off-street parking space per bedroom for short-term rental properties.

It's important to note that some areas in Rhode Island have implemented stricter regulations or even bans on short-term rentals. For instance, in Narragansett, a new ordinance passed in 2024 caps the number of short-term rental permits and imposes significant fees on operators. However, this ordinance is currently on hold due to a lawsuit filed by landlords and property managers.

Prospective short-term rental hosts should also be aware of the potential impact on their property insurance. Standard homeowners insurance policies often do not provide adequate coverage for short-term rental activities, as they typically include business activity exclusions. Hosts may need to obtain specialized short-term rental insurance to ensure proper coverage.

Starting a short-term rental business in Rhode Island requires careful planning and adherence to both state and local regulations. Potential hosts should thoroughly research the specific requirements in their area, register their property with the state, obtain necessary permits from their local municipality, and ensure they have appropriate insurance coverage. By following these steps and staying informed about any changes in regulations, Rhode Island property owners can successfully navigate the short-term rental market and provide unique accommodations to visitors while complying with all legal requirements.

Short-Term Rental Licensing Requirement in Rhode Island

To operate a short-term rental (STR) in Rhode Island, property owners must obtain a license from the Rhode Island Department of Business Regulation (DBR). The licensing process ensures that STRs meet safety standards and comply with state regulations. Here are the detailed requirements based on the official Rhode Island DBR website:

• Registration: Property owners must register their STR with the DBR online through the Short-Term Rental Registration Portal. The registration is valid for two years and must be renewed before expiration.
• Fire Safety Inspection: STRs must pass a fire safety inspection conducted by the local fire department or a certified third-party inspector. The inspection verifies that the property has working smoke detectors, carbon monoxide detectors, and fire extinguishers, as well as proper egress routes.
• Zoning Compliance: STR owners must ensure their property complies with local zoning ordinances. Some municipalities may have specific regulations or restrictions on STRs, such as owner-occupancy requirements or limits on the number of rental days per year.
• Insurance: While not a state requirement, it is highly recommended that STR owners obtain appropriate insurance coverage for their rental property. Standard homeowners insurance policies may not provide adequate protection for STR activities.
• Tax Registration: STR owners must register with the Rhode Island Division of Taxation to obtain a sales tax permit and remit the required 7% state sales tax on rental income.
• Occupancy Limits: STRs must adhere to occupancy limits based on the number of bedrooms and available parking spaces. The maximum occupancy is two people per bedroom plus two additional people, not to exceed 10 people total.
• Safety Information: STR owners must provide guests with emergency contact information, a floor plan indicating fire exits and escape routes, and the location of fire extinguishers and smoke detectors.

To submit the licensing requirements, property owners can visit the Rhode Island DBR website and create an account on the Short-Term Rental Registration Portal. The portal allows users to complete the registration process, pay the required fees, and upload necessary documents such as the fire safety inspection report.

The licensing fee for STRs in Rhode Island is $50 per property, payable every two years upon registration renewal. The fire safety inspection fee varies by municipality but typically ranges from $50 to $150.

The processing time for STR licenses depends on the completeness of the application and the turnaround time for the fire safety inspection. On average, the process takes between two to four weeks from submission to approval, assuming all requirements are met.

Operating an STR without a valid license can result in fines and penalties. The DBR conducts periodic audits and investigations to ensure compliance with state regulations. First-time offenders may receive a warning and be required to obtain a license within a specified timeframe. Repeat offenders can face fines of up to $1,000 per violation and potential legal action.

It is crucial for STR owners in Rhode Island to familiarize themselves with the licensing requirements and ensure they maintain compliance to avoid penalties and provide a safe and legal rental experience for their guests.

Required Documents for Rhode Island Short-Term Rentals

To successfully register your short-term rental property in Rhode Island, you will need to provide several key documents. These documents ensure that your property meets safety standards, complies with local zoning regulations, and is properly insured. Here is a list of the required documents along with their purpose and where to obtain them:

1. Completed Short-Term Rental Registration Form: This form, available on the Rhode Island Department of Business Regulation (DBR) website, collects essential information about your property, including its address, owner or property manager contact details, and the type of rental being offered (whole property, private room, or shared space).
2. Fire Safety Inspection Report: A fire safety inspection must be conducted by your local fire department or a certified third-party inspector. The report verifies that your property has working smoke detectors, carbon monoxide detectors, fire extinguishers, and proper egress routes. Contact your local fire department to schedule an inspection.
3. Proof of Zoning Compliance: You must provide documentation showing that your short-term rental complies with local zoning ordinances. This may include a letter from your local zoning board or a copy of your property's zoning certificate. Check with your municipality's zoning department for specific requirements.
4. Proof of Insurance: While not a state requirement, it is highly recommended that you obtain appropriate insurance coverage for your short-term rental property. Provide a copy of your insurance policy or a certificate of insurance demonstrating that your property is adequately protected against potential risks associated with short-term rentals.
5. Sales Tax Permit: As an STR owner, you are required to collect and remit the 7% state sales tax on rental income. Provide a copy of your sales tax permit, which can be obtained by registering with the Rhode Island Division of Taxation.
6. Owner Identification: You will need to provide a valid government-issued photo ID, such as a driver's license or passport, to verify your identity as the property owner or authorized property manager.
7. Property Deed or Lease Agreement: To prove ownership or legal right to rent the property, you must submit a copy of the property deed or, if you are a tenant, a copy of your lease agreement showing that you are permitted to sublet the property as a short-term rental.
8. Floor Plan: Provide a detailed floor plan of your short-term rental property, clearly indicating the location of bedrooms, fire exits, escape routes, fire extinguishers, and smoke detectors. This document is essential for ensuring guest safety and compliance with occupancy limits.
9. Parking Plan: If your municipality requires off-street parking for short-term rentals, you will need to submit a parking plan showing the number and location of available parking spaces on your property.
10. Short-Term Rental Agreement: Provide a copy of your standard short-term rental agreement, which should include all necessary terms and conditions, such as rental period, payment details, house rules, and guest responsibilities.

By gathering and submitting these required documents, you will be well on your way to legally operating your short-term rental property in Rhode Island. Be sure to keep all documents up-to-date and readily available in case of any inquiries or inspections by local authorities.

Rhode Island Short-Term Rental Taxes

Short-term rental operators in Rhode Island are subject to several taxes that must be collected from guests and remitted to the appropriate authorities. Understanding these tax obligations is crucial for compliance and proper financial management of your rental business. Here's a breakdown of the taxes that apply to short-term rentals in Rhode Island:

Rhode Island Sales Tax: A 7% state sales tax applies to the total listing price, including any cleaning fees, for reservations of 30 nights or less. This tax is applicable to all types of short-term rentals, whether they are entire homes, apartments, or individual rooms.

Rhode Island Statewide Hotel Tax: A 5% statewide hotel tax is imposed on the rental of individual private or shared rooms in a host's home for stays of 30 nights or less. It's important to note that this tax does not apply to the rental of entire dwelling units.

Rhode Island Local Hotel Tax: An additional 1% local hotel tax is levied on all short-term rentals of 30 nights or less, including both room rentals and whole-home rentals.

These taxes combine to create a significant tax burden for short-term rental operators. For example, a private room rental would be subject to a total tax rate of 13% (7% sales tax + 5% statewide hotel tax + 1% local hotel tax), while a whole-home rental would be subject to an 8% tax rate (7% sales tax + 1% local hotel tax).

It's worth noting that some hosting platforms, such as Airbnb and Vrbo, collect and remit these taxes on behalf of hosts in Rhode Island. However, it's ultimately the host's responsibility to ensure that all applicable taxes are properly collected and remitted.

Possible Write-offs and Deductions

While short-term rental taxes in Rhode Island can be substantial, there are several potential write-offs and deductions that can help offset your tax liability:

1. Mortgage Interest: If you have a mortgage on your rental property, the interest paid is typically deductible.
2. Property Taxes: The property taxes you pay on your rental property are generally deductible.
3. Utilities: Expenses for electricity, gas, water, and internet services used for your rental can be deducted.
4. Cleaning and Maintenance: Costs associated with cleaning the rental between guests and general property maintenance are deductible.
5. Insurance: Premiums paid for rental property insurance can be written off.
6. Depreciation: You may be able to deduct the cost of your rental property over time through depreciation.
7. Furnishings and Supplies: Expenses for furniture, linens, and other supplies provided for guests can be deducted.
8. Marketing and Advertising: Costs related to promoting your rental, including professional photography or listing fees, are typically deductible.
9. Professional Fees: Expenses for accountants, lawyers, or property managers related to your rental business can be written off.
10. Travel Expenses: If you travel to manage or maintain your rental property, these costs may be deductible.

It's important to keep detailed records of all income and expenses related to your short-term rental to maximize your deductions and ensure compliance with tax laws. Additionally, tax laws can be complex and change frequently, so it's advisable to consult with a tax professional familiar with short-term rental regulations in Rhode Island to ensure you're taking advantage of all available deductions while remaining compliant with state and local tax laws.

Does Rhode Island Strictly Enforce STR Rules?

Rhode Island has taken a firm stance on short-term rental regulations, implementing strict enforcement measures across the state. Compared to other states, Rhode Island is generally considered less Airbnb-friendly due to its comprehensive registration requirements and tax obligations.

The state's approach to short-term rental regulation is characterized by a strong emphasis on compliance and transparency. The Rhode Island Department of Business Regulation (DBR) has established a mandatory registration system for all short-term rentals, requiring hosts to obtain and display a registration number on their listings. This system, coupled with the state's collaboration with platforms like Airbnb to ensure compliance, demonstrates Rhode Island's commitment to enforcing its STR rules.

Despite the stringent regulations, many hosts continue to operate in Rhode Island, adapting their businesses to comply with the state's requirements. However, the sentiment among hosts, as expressed on platforms like BiggerPockets and Reddit, suggests that operating an STR in Rhode Island comes with significant challenges.

The strict enforcement has led some potential hosts to reconsider entering the market. A prospective investor on BiggerPockets wrote, "After researching Rhode Island's STR laws, I've decided to look elsewhere. The regulations seem to favor long-term rentals, and the compliance costs eat into potential profits."

However, it's important to note that while enforcement is strict, it's not impossible to operate successfully in Rhode Island. Hosts who diligently follow the rules report being able to maintain profitable businesses. A host from Providence shared on Reddit, "Yes, the rules are strict, but once you're set up and compliant, it's manageable. The key is to factor in all the costs and requirements from the start."

In comparison to more Airbnb-friendly cities like Nashville or Austin, Rhode Island's regulatory environment is decidedly more restrictive. The state's approach prioritizes community concerns and tax revenue over the expansion of the short-term rental market. This stance has made Rhode Island less attractive to out-of-state investors looking for easy entry into the STR market.

In conclusion, Rhode Island strictly enforces its STR rules, creating a challenging but navigable environment for hosts. While not as Airbnb-friendly as some other locations, the state's clear regulations and enforcement mechanisms provide a structured framework for those willing to comply. Hosts continue to operate in Rhode Island despite the rules, but they do so with a full understanding of the regulatory landscape and the need for strict adherence to state and local requirements.

How to Start a Short-Term Rental Business in Rhode Island

Starting a short-term rental business in Rhode Island requires careful planning and adherence to state and local regulations. Here's a comprehensive guide to help you get started:

Research Local Regulations

1. Before investing in a property, thoroughly research the short-term rental regulations in your target area. Rhode Island municipalities have varying rules, so it's crucial to understand the specific requirements for your location. Check with the local zoning board and review the city or town's ordinances regarding short-term rentals.
2. Tip: Consider consulting with a local real estate attorney who specializes in short-term rentals to ensure you fully understand all applicable laws.

Choose and Acquire a Suitable Property

1. Select a property that meets both local regulations and market demand. Consider factors such as proximity to attractions, accessibility, and potential for year-round bookings. Ensure the property is in a zone that allows short-term rentals.
2. Tip: Look for properties with unique features or prime locations to stand out in the competitive Rhode Island market, especially in popular areas like Newport or Block Island.

Register Your Business

1. Form a legal entity for your short-term rental business, such as an LLC, to protect your personal assets. Register your business with the Rhode Island Secretary of State and obtain an Employer Identification Number (EIN) from the IRS.
2. Tip: Consider working with a certified public accountant to set up your business structure in a tax-efficient manner.

Obtain Required Licenses and Permits

1. Register your short-term rental with the Rhode Island Department of Business Regulation (DBR). Complete the fire safety inspection and ensure your property complies with all local zoning requirements. Obtain a sales tax permit from the Rhode Island Division of Taxation.
2. Tip: Create a checklist of all required documents and set reminders for renewal dates to stay compliant.

Secure Proper Insurance

1. Obtain comprehensive short-term rental insurance that covers property damage, liability, and loss of income. Standard homeowners insurance often doesn't provide adequate coverage for rental activities.
2. Tip: Shop around for insurance policies specifically designed for short-term rentals, as they often offer better coverage at competitive rates.

Prepare Your Property

1. Furnish and equip your rental to meet guest expectations. Ensure all safety features are in place, including smoke detectors, carbon monoxide detectors, and fire extinguishers. Create a detailed floor plan indicating emergency exits and safety equipment locations.
2. Tip: Consider hiring a professional interior designer to create an appealing and functional space that will attract positive reviews and repeat guests.

Set Up Your Pricing Strategy

• Research the local market to determine competitive pricing for your rental. Consider seasonal fluctuations, local events, and weekday vs. weekend rates. Factor in all costs, including taxes, cleaning fees, and platform commissions.
• Tip: Use dynamic pricing tools to automatically adjust your rates based on demand, helping to maximize occupancy and revenue.

Create Listings on Booking Platforms

• Develop compelling listings on popular platforms like Airbnb, VRBO, and Booking.com. Include high-quality photos, detailed descriptions, and highlight unique features of your property and location.
• Tip: Invest in professional photography to make your listing stand out and attract more bookings.

Develop House Rules and Guest Communication Plan

• Establish clear house rules that comply with local regulations and protect your property. Create a comprehensive guide for guests, including check-in/out procedures, Wi-Fi information, and local recommendations.
• Tip: Use a digital guidebook or app to provide guests with easy access to all necessary information, enhancing their experience and reducing the need for constant communication.

Set Up a Cleaning and Maintenance Schedule

• Develop a reliable system for cleaning and maintaining your property between guests. This may involve hiring a professional cleaning service and establishing relationships with local handymen for quick repairs.
• Tip: Create detailed checklists for cleaning and maintenance to ensure consistency and quality across all guest stays.

Implement a Review Management Strategy

• Actively encourage guests to leave reviews and respond promptly to all feedback, both positive and negative. Use constructive criticism to improve your offering and address any issues quickly.
• Tip: Set up automated messages to request reviews from guests shortly after their stay, increasing the likelihood of receiving feedback.

Stay Informed and Adapt

• Keep up-to-date with changes in local regulations and market trends. Attend local short-term rental association meetings and network with other hosts to share best practices.
• Tip: Consider joining online forums or local host groups to stay connected with the Rhode Island short-term rental community and stay informed about industry developments.

By following these steps and implementing the provided tips, you'll be well-positioned to start and operate a successful short-term rental business in Rhode Island, navigating the state's regulatory landscape while providing exceptional experiences for your guests.

Who to Contact in Rhode Island about Short-Term Rental Regulations and Zoning?

For questions about Rhode Island's statewide short-term rental regulations, registration process, and requirements, contact:

Rhode Island Department of Business Regulation (DBR)

• 1511 Pontiac Avenue, Building 68-1
• Cranston, RI 02920
• Phone: (401) 462-9506
• Email: dbr.realestate@dbr.ri.gov

The DBR oversees the registration of all short-term rentals in the state and can provide guidance on the necessary steps to legally operate a rental property.

For specific questions related to local zoning ordinances, permits, and restrictions, reach out to your city or town's zoning department or building inspector's office. Some key contacts in popular Rhode Island destinations include:

Newport Building Division

• City Hall, 43 Broadway
• Newport, RI 02840
• Phone: (401) 845-5459
• Email: buildingdivision@cityofnewport.com

Providence Department of Inspection and Standards

• 444 Westminster Street
• Providence, RI 02903
• Phone: (401) 680-5201
• Email: inspections@providenceri.gov

Narragansett Building Inspection Department

• 25 Fifth Avenue
• Narragansett, RI 02882
• Phone: (401) 782-0619

Local host communities and organizations can provide valuable support, resources, and networking opportunities for navigating Rhode Island's short-term rental landscape:

1. Join the "Rhode Island Airbnb Hosts" Facebook group to connect with hosts in your area, discuss local regulations, and share experiences.
2. Attend meetings of the Rhode Island Association of Realtors' Property Management/Apartment Council to stay informed about industry trends and legislative updates impacting short-term rentals.
3. Participate in the "Short-Term & Vacation Rental Discussions" forum on BiggerPockets to learn from experienced investors and ask questions specific to the Rhode Island market.

By engaging with these state and local resources, short-term rental hosts in Rhode Island can ensure they are operating in compliance with all applicable laws and regulations while maximizing the potential of their investment properties.

What Do Airbnb Hosts in Rhode Island on Reddit and Bigger Pockets Think about Local Regulations?

Based on discussions in Rhode Island-focused threads on Reddit and BiggerPockets, short-term rental hosts have mixed opinions about the state's regulations. Here are some key insights from local hosts:

On a Reddit thread about Providence considering a ban on short-term rentals in some areas, one user commented:

"As a frequent user of Airbnb I will have to throw my hat in with those who would like to ban it. I've met a few great Airbnb hosts who live upstairs or whatever, but more and more they are corporate 'super hosts' who have just bought up what might have been rental units for local residents."

This sentiment reflects a growing concern among Rhode Islanders about the impact of short-term rentals on housing availability and affordability.

In a discussion about Narragansett's new short-term rental ordinance on Reddit, a local host expressed frustration:

"They originally wanted to ban rentals fewer than 30 days. All in the name of bringing families back to the town and making housing 'affordable' again. When instead, this will simply wreak havoc on an already struggling seasonal economy."

This comment highlights the tension between preserving community character and supporting the local tourism economy.

On BiggerPockets, a Rhode Island investor shared their experience with the state's registration process:

"The registration with the DBR was actually pretty straightforward. It's the local regulations that are giving me headaches. Each town seems to have its own set of rules, and they're constantly changing. It's hard to keep up."

This insight underscores the challenges hosts face in navigating both state and local regulations.

On a Facebook group for Rhode Island Airbnb hosts, one member shared a positive experience with compliance:

"Yes, the rules are strict, but once you're set up and compliant, it's manageable. The key is to factor in all the costs and requirements from the start. I've found that being transparent with my neighbors about my Airbnb has helped avoid conflicts too."

This comment suggests that while regulations can be challenging, some hosts are finding ways to operate successfully within the rules.

These real-life experiences and opinions from Rhode Island hosts provide a nuanced picture of the short-term rental landscape in the state, highlighting both challenges and opportunities in the face of evolving regulations.

Disclaimer: While we here at BNBCalc strive to keep all of our regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each area and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.