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H 7657Property

State Affairs and Government - Tourism and Development

This bill taxes short-term rentals as commercial property unless the owner lives there as their primary residence.

Held for study
Population
Affected
28
Email Legislator
Introduced Feb 11, 2026Committee House Municipal Government & Housing

Plain-English Summary

This legislation updates the regulations for short-term rentals (such as those found on Airbnb or VRBO). It requires owners to register their properties with the state and specifically declare if the property is their primary residence. Hosting platforms must display registration numbers and expiration dates on listings and submit quarterly activity reports to the state. Significantly, the bill changes tax classifications: short-term rentals that are the owner's primary residence will be taxed as residential property, while those that are not the owner's primary residence will be taxed as commercial property.

For younger readers

This new rule changes how people pay taxes on houses they rent out to vacationers for short trips. If a person actually lives in the house most of the time, they pay normal house taxes. But if they just own the house to make money from visitors and don't live there, they have to pay higher business taxes. It also forces the websites that list these houses to share information with the government to make sure everyone is following the rules and telling the truth about where they live.

Who & Where It Applies

Impacted groups
Short-term rental ownersHosting platforms (e.g., Airbnb, VRBO)Real estate investorsTouristsMunicipal Tax Assessors
Impacted communities
All

Constitutional & Fiscal Check

Low. While property owners may argue that reclassifying residential homes as commercial property for tax purposes is a violation of due process or a "taking," states generally have broad discretion in tax classification based on usage. However, the requirement for hosting platforms to turn over detailed user data without a warrant could face scrutiny under the Fourth Amendment or privacy-related challenges, though commercial regulation usually permits such reporting.

Estimated cost
Non-primary residence STR owners: Difference between residential and commercial tax rates (Amount unknown), Hosting Platforms: Administrative costs for reporting (Amount unknown)
Estimated revenue
Municipalities: Difference between commercial and residential tax rates (Amount unknown), State: Civil fines of $250 to $1,000 per violation

Bill Analysis

Both viewpoints
For Progressives
  • Discourages the commodification of housing stock by investors, potentially freeing up more long-term housing units for local residents and helping to alleviate the housing crisis.
  • Ensures that investment properties operating as businesses contribute their fair share to the community by taxing them at the commercial rate rather than the lower residential rate.
  • Provides municipalities with increased revenue streams from commercial property taxes, which can be used to fund public schools, infrastructure, and social services.
  • Could financially strain middle-class families who rely on rental income from a single vacation home to make ends meet, potentially forcing them to sell to wealthier entities.
  • The increased tax costs might be passed directly to consumers, making travel and tourism in the state more expensive and potentially reducing tourism-related service jobs.
  • Relies on punitive taxation rather than direct rent control or affordable housing mandates, which may not guarantee that the "freed up" housing stock becomes affordable for low-income residents.
For Conservatives
  • Levels the economic playing field for traditional hotel and bed-and-breakfast business owners who have been unfairly competing against under-taxed short-term rentals.
  • Strengthens the rule of law by enforcing strict registration and preventing illegal, under-the-table business operations from evading state oversight.
  • Protects the property rights and quiet enjoyment of traditional homeowners by discouraging the transformation of residential neighborhoods into transient commercial zones.
  • Imposes a significant tax hike on property owners, punishing investment and interfering with the free market rights of individuals to use their property as they see fit.
  • Expands government surveillance and data collection by requiring private platforms to report detailed user activity and property data to the state.
  • Creates new regulatory compliance burdens and potential fines for businesses (hosting platforms) and property owners, expanding the size and reach of the administrative state.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 20 additions · 9 deletions

SECTION 1. Sections 42-63.1-2 and 42-63.1-14 of the General Laws in Chapter 42-63.1 entitled "Tourism and Development" are hereby amended to read as follows: 42-63.1-2. Definitions. For the purposes of this chapter:

(1) “Consideration” means the monetary charge for the use of space devoted to transient lodging accommodations.

(2) “Corporation” means the Rhode Island commerce corporation.

(3) “District” means the regional tourism districts set forth in § 42-63.1-5.

(4) “Hosting platform” means any electronic or operating system in which a person or entity provides a means through which an owner may offer a residential unit for “tourist or transient” use. This service is usually, though not necessarily, provided through an online or web- based system which generally allows an owner to advertise the residential unit through a hosted website and provides a means for a person or entity to arrange, or otherwise facilitate reservations for, tourist or transient use in exchange for payment, whether the person or entity pays rent directly to the owner or to the hosting platform. All hosting platforms are required to collect and remit the tax owed under this section.

(5) “Hotel” means any facility offering a minimum of one (1) room for which the public may, for a consideration, obtain transient lodging accommodations. The term “hotel” shall include hotels, motels, tourist homes, tourist camps, lodging houses, and inns. The term “hotel” shall also include houses, condominiums, or other residential dwelling units, regardless of the number of rooms, which are used and/or advertised for rent for occupancy. The term “hotel” shall not include schools, hospitals, sanitariums, nursing homes, and chronic care centers.

(6) “Occupancy” means a person, firm, or corporation’s use of space for transient lodging accommodations not to exceed thirty (30) days. Excluded from “occupancy” is the use of space for which the occupant has a written lease for the space, which lease covers a rental period of twelve

(12) months or more. Furthermore, any house, condominium, or other residential dwelling rented, for which the occupant has a documented arrangement for the space covering a rental period of more than thirty (30) consecutive days or for one calendar month is excluded from the definition of occupancy.

(7) “Owner” means any person who owns real property and is the owner of record. Owner shall also include a lessee where the lessee is offering a residential unit for “tourist or transient” use.

(8) “Primary residence” means the location of the residential property at which:

(i) The owner lives for seven (7) or more months out of the year; and

(ii) The owner is registered to vote. (8)(9) “Residential unit” means a room or rooms, including a condominium or a room or a dwelling unit that forms part of a single, joint, or shared tenant arrangement, in any building, or portion thereof, which is designed, built, rented, leased, let, or hired out to be occupied for non- commercial use.

(10) “Short-term rental” means a person, firm, or corporation’s utilization, for transient lodging accommodations, of a rental not to exceed thirty (30) nights at a time. (9)(11) “Tax” means the hotel tax and whole home short-term rental tax imposed by § 44- 18-36.1(a) and (d). (10)(12) “Tourist or transient” means any use of a residential unit for occupancy for less than a thirty (30) consecutive day term of tenancy, or occupancy for less than thirty (30) consecutive days of a residential unit leased or owned by a business entity, whether on a short-term or long- term basis, including any occupancy by employees or guests of a business entity for less than thirty

(30) consecutive days where payment for the residential unit is contracted for or paid by the business entity. (11)(13) “Tour operator” means a person that derives a majority of their or its revenue by providing tour operator packages. (12)(14) “Tour operator packages” means travel packages that include the services of a tour guide and where the itinerary encompasses five (5) or more consecutive days. 42-63.1-14. Offering residential units through a hosting platform.

(a) For any rental property offered for tourist or transient use on a hosting platform that collects and remits applicable sales and hotel taxes in compliance with §§ 44-18-7.3(b)(4)(i), 44- 18-18, and 44-18-36.1, cities, towns, or municipalities shall not prohibit the owner from offering the unit for tourist or transient use through such hosting platform, or prohibit such hosting platform from providing a person or entity the means to rent, pay for, or otherwise reserve a residential unit for tourist or transient use. A hosting platform shall comply with the requirement imposed upon room resellers in §§ 44-18-7.3(b)(4)(i) and 44-18-36.1 in order for the prohibition of this section to apply. The division of taxation shall at the request of a city, town, or municipality confirm whether a hosting platform is registered in compliance with § 44-18-7.3(b)(4)(i).

(b) Any short-term rental property listed for rent on the website of any third-party hosting platform that conducts business in Rhode Island shall be registered with the department of business regulation. The registration shall provide the information necessary to identify the property pursuant to subsection (d) of this section. For purposes of this section, the term “short-term rental” means a person, firm, or corporation’s utilization, for transient lodging accommodations, not to exceed thirty (30) nights at a time.

(c) The department of business regulation shall contact all hosting platforms that list property in Rhode Island on their website for rent and that submit hotel taxes to the division of taxation and/or the city of Newport and shall provide notice of the registration requirement, pursuant to this section, instructing the hosting platforms to notify their listed properties to register with the department of business regulation annually or be subject to fines pursuant to subsection (i) of this section. Provided further, renewals of registrations pursuant to this section shall become due for renewal on the anniversary date of the original registration.

(d) The state registration pursuant to this section shall include:

(1) The principal place of business of the owner, or if outside the state, the agent for service of process or property manager for the owner;

(2) The phone number of the owner of the property and/or property manager;

(3) The email address of the property owner and/or property manager;

(4) The address of the rental property;

(5) The number of rooms for rent at the property;

(6) Whether the registrant rents or owns; and

(7) Intended use (entire space, private room, or shared space); and

(8) The primary residence, as defined by § 42-63.1-2, of the owner of the property.

(e) The assigned registration number shall consist of numeric and alpha characters, the alpha characters shall correspond to the city/town where the property is located and shall be uniform for the remaining properties in said city/town.

(f) Registration forms and/or any registration materials required by the department shall be completed prior to a listing by a hosting platform. The registration number shall be valid for the year during which it is assigned, and if a listed property is not duly registered after the expiration of the annual registration period, the hosting platform shall remove the property listing from its website within fourteen (14) days of notification from the department.

(g) The department of business regulation shall promulgate rules and regulations to correspond with and enforce this section and § 42-63.1-14.1 and may charge a registration fee to property owners registering with the department pursuant to this section.

(h) The department of business regulation shall create an online database to store all registered short-term rental units, and each unit shall have an online identification number in said database to correspond with subsection (e) of this section.

(i) Any owner of the property who or that fails to register with the department of business regulation as prescribed herein and lists the property as a short-term rental on a hosting platform website shall be subject to a civil fine as follows:

(1) Two hundred fifty dollars ($250) for the first thirty (30) days of noncompliance;

(2) Five hundred dollars ($500) for between thirty-one (31) and sixty (60) days of noncompliance; and

(3) One thousand dollars ($1,000) for more than sixty (60) days of noncompliance.

(j) Notwithstanding any other law or provision to the contrary, no person shall list any residence for short-term rental for tourist or transient use without the property’s current, valid registration number, and its expiration date, which hosting platforms shall require to be displayed on the listing advertisement. Any hosting platform that offers short-term rental of residential property for tourist or transient use without requiring the owner to display the current, valid registration number of a property, and its expiration date, shall be subject to a civil fine of two hundred fifty dollars ($250) per day per violation, with each property listing constituting a separate violation.

(k) A hosting platform shall provide to the department of business regulation, on a quarterly basis, an electronic report, in a format determined by the department of business regulation, of the listings maintained, authorized, facilitated, or advertised by the hosting platform within the state for the applicable reporting period. The report shall include a breakdown of the municipality where the listings are located, whether the listing is for a room or a whole unit, the total number of short- term rentals listed on the platform, the registration number of each short-term rental listed on the platform, the URL link of each short-term rental listed on the platform, and shall include the number of nights each unit was reported as occupied during the applicable reporting period.

(l) Any short-term rental registered pursuant to subsection (c) of this section that is the owner’s primary residence shall be classed as residential real estate in accordance with § 44-5- 11.8(b)(1).

(m) Any short-term rental registered pursuant to subsection (c) of this section that is not the owner’s primary residence shall be classed as commercial property in accordance with § 44-5- 11.8(b)(2).

SECTION 2. This act shall take effect upon passage.