This week Rich and Steve had a call from Margaret in North Providence asking about the proposed 13% tax on private home rentals. Article 24 of Governor Chafee's budget would require owners to collect taxes totaling 13 % on short-term rentals of homes, cottages and condominiums. Originally designed with high-end summer rentals in mind, it will have much broader implications for many people in the state. The Rhode Island Association of Realtors is aggressively fighting the governor’s proposal Article 24 of the Governor’s FY 2013 Budget Bill would:
- Impose a 13% tax on tenants (6% hotel tax and 7% sales tax).
- Require home owners to collect taxes from tenants on short-term rentals
- Apply to any home or condo this is rented for a total of 15 days or more per calendar year.
- Tax the first 30 days of each rental to a different tenant.
- Apply to month to month rentals, short-term military rentals, seasonal rentals, student rentals, and other rentals throughout the state.
- Exempt only rentals with a written lease for one year or more.
- Impose further hardships of those who are having difficulty selling their homes and have chosen to rent their home and move in to more affordable living arrangements.
- Burden renters at a time when rental housing is in short supply due to foreclosures and short sales, Rhode Island has lost nearly 7,000 rental units to foreclosure since the crisis started
- Drive tourists to Massachusetts and Connecticut, which do not tax private home rentals.
- Discourage investment in an already sluggish second home market.
- Take effect on July 1, 2012 in the middle of the summer rental season with uncertain impact on prepaid rentals.
