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Are You Up to Speed?

Are you up to speed on the new tax on short-term, private home rentals?

rental tax

A few months ago, the General Assembly approved a new tax in the Governor’s budget on short-term, private home rentals. Since July 1st, any homeowner or rental agent that rents all or part of a cottage, home or other residence for 30 days or less is required to apply for a sales tax permit with the Rhode Island Division of Taxation and pay a tax on the rental proceeds. Those who rent an entire home now owe an eight percent tax; those who rent part of a home – one or two rooms for example – owe 13 percent. Rentals of more than 30 days per tenant are not subject to the new tax, nor are month-to-month tenancies, nine-month rentals and one-year leases as long as there is a written rental agreement. In addition, any rental completed by December 31, 2015 is exempt if the rental contract was signed prior to July 1st of this year.
Property owners, landlords and rental agents should be aware that there is no minimum threshold for this tax to take effect. If a property is rented for one day per year, the taxes would apply. Once a property owner files with the State, returns must be filed monthly whether or not taxes are owed for that month unless the homeowner or rental agent has indicated on their tax permit application that they rent seasonally only. In that case, they need to file only during the seasonal months indicated on the permit. The taxes are due to the Division of Taxation by the 20th of the month following the collection of rental income.
To make matters a bit more complicated, only part of the tax is filed with the Rhode Island Division of Taxation. If a property owner owes the eight percent tax, seven percent goes to the State as sales tax, one percent is paid to the city or town as a local hotel tax. The same holds true for those who owe 13 percent for renting part of a home but they must also pay an additional five percent state hotel tax.
The Rhode Island Division of Taxation plans to check Craigslist and similar sites and cross check the rental income that taxpayers declare on the federal tax filings. Failure to submit the new taxes could result in up to one year imprisonment and/or financial penalties of up to $5000 per occurrence. Though the Rhode Island Department of Revenue announced publicly that there will be no criminal prosecutions for failure to comply for the first fiscal year which ends on June 30, 2016, it will impose late filing fees, fines, interest of 1.5% per month and other penalties.


Anyone looking for more information or answers to frequently asked questions can visit the Rhode Island Association of Realtors’ website at

When Should the MBE/DBE Look to Invest in Real Estate

by Michael Brito

Own or lease? This is usually the question on everyone’s mind when the topic of additional space arises. I say “additional space” because this question isn’t typically the initial one when we start-up. Here’s what happens when one of two things occur; expansion dictates the need for additional area or the location is now up for renewal therefore purchasing conversations begin. At any rate, we need to be ready to answer some very relevant questions. Ask the following, and be honest with yourself as I’ve mentioned in past articles, fooling yourself will only harm your company so use an informed consultant here.
1. Am I properly positioned (financially and emotionally) to take on this next step? Talk to your financial advisor, your banker and your partner – in business and your partner at home.

2. Is this location where I want to be, is it the best location for my company’s future? Look at your five and ten year outlook. Be sure this location will afford you the best exposure as well as opportunity.

3. Have I done a proper market analysis to show me the best ROI should I choose to sell? By all means consult with an independent agent -independent of the potential deal!

4. Does it provide room for expansion in the future? Refer back to your future goals and expand on them. Research local codes, neighboring structures and potential permitting issues you may encounter. Be sure the changes in your goals fits the site you are looking into.

5. Has my insurance agent assessed the additional risk and advised me? Assessing risk is self-explanatory but often times we missed the simplest steps which could be detrimental to a business.

6. Are there other tenants in the building presently? Do I want to take on the role of landlord? Accepting the role as landlord will most definitely add a burden to the smaller enterprise and you must be able to handle it!

7. Are there any liens or tax holds on the property? Using a trusted closing attorney that will do a thorough review so you’re not blindsided later on is extremely important. Old debt is an anchor, more so when it’s not your own!

8. Should the company look into property acquisition and build and am I able to handle such a project or do I have the knowledge/time? If you have no experience in this area, stay clear if you can’t afford to contract out the responsibility.
These are just a few questions when considering the lease or purchase conundrum regarding your business expansion questions. When focusing on the minority business community regarding real-estate, things get interesting! Consider the available agencies in our little state of Rhode Island that exist to mentor, guide and coach us through the process of growth and generally doing what we do.
These same groups are there to assist us in the area of real estate advice/acquisition so reach out and just in case you’re not aware of them, I’m here to help…
Michael Brito Team Member, Managing the Road Ahead

Dissecting the Caveats of a Legal Non-Conforming Use

by Jeffrey W. Ray, Esq.

Essentially every municipality has adopted a zoning ordinance which, among other things, serves to regulate the development of real property and the types of uses to which such real property may be put within the boundaries of the municipality. Typically, a municipality is divided into zoning districts (i.e. residential, commercial, agricultural and industrial), each of which clearly delineates the permitted use or uses of real property located within each zoning district. Through the adoption and enforcement of a zoning ordinance, a municipality is able to regulate development within a particular locality resulting, presumably, in the preservation of real property values.
At the time a zoning ordinance is adopted or amended, as the case may be, those structures legally in existence cannot be eliminated as a result of the adoption of, or amendment to, the zoning ordinance simply because such structure fails to conform to the newly enacted provisions of the zoning ordinance or amendment. This is clearly delineated in R.I. Gen. Laws § 4524-39 (a) and (b) as follows:
“§ 45-24-39 General provisions – Nonconforming development. – (a) Any city or town adopting or amending a zoning ordinance under this chapter shall make provision for any use, activity, structure, building, or sign or other improvement, lawfully existing at the time of the adoption or amendment of the zoning ordinance, but which is nonconforming by use or nonconforming by dimension. The zoning ordinance may regulate development which is nonconforming by dimension differently than that which is nonconforming by use. (b) The zoning ordinance shall permit the continuation of nonconforming development; however, this does not prohibit the regulation of nuisances.”
The term most commonly used to describe this particular scenario is that the use is “grandfathered”. A “grandfathered” use, once sanctioned, is deemed to be a legal non-conforming use under most every zoning ordinance. In Rhode Island, “nonconforming” is limited to either use or dimension. However, there are a number of caveats unique to this doctrine, which include destruction, abandonment and amortization, any one of which can result in the loss or termination of the legal non-conforming use status.


In a number of jurisdictions, the legal non-conforming use status will be lost if the structure benefiting from such right is destroyed beyond a certain percentage (typically 50%), including acts of God. In this situation, the zoning ordinance will prohibit the rebuilding of the structure, thereby subjecting the parcel to the strictures of the current zoning regulations. However, in other jurisdictions, notwithstanding the partial or even total destruction of a structure recognized as a legal non-conforming use, as long as the structure is rebuilt within a certain period of time, without deviation from its prior dimensions ( i.e. floor area, building height, parking, and property coverage), the legal non-conforming use may be preserved. Under §201.9 of the Providence Zoning Ordinance, “If more than fifty (50) percent of the gross floor area (GFA) of a building or structure nonconforming by use is involuntarily demolished, destroyed, or damaged, the Board may grant a special use permit, in accordance with section 902.4, to repair or rebuild the structure to the same size and dimension as previously existed.”
In the event of a partial or total destruction of a structure protected as a legal non-conforming use, it is imperative that the owner (i) carefully review (with the assistance of legal counsel, if necessary) the applicable provisions of the municipal zoning ordinance and building regulations governing the status and use of such structure, and (ii) meet with the local zoning and building officials before repairing or rebuilding same.


If the legal non-conforming use of a structure or real property is discontinued, such discontinuance will typically result in a loss of the legal non-conforming use status under most zoning ordinances, as long as the owner has manifested an intent to abandon the use. However, a discontinuance of the use as a result of acts of God, acts of war, foreclosure or condemnation (among others), are generally not considered evidence of the owner’s intent to abandon the legal non-conforming use status, as these occurrences are usually beyond the owner’s control. The Rhode Island Supreme Court has repeatedly held that “… the mere discontinuance of a nonconforming use for a period of time does not constitute an abandonment of that use. There must also exist an intent to abandon.” See Town of Coventry v. Carl D. Glickman, et al, 429 A.2d 440 (R.I. 1981). In Richards v. Zoning Board of Review of Providence, 213 A. 2d 814 (R.I. 1965), the Court found no intent to abandon a nonconforming bakery notwithstanding the fact that no baking operations were carried on by the owner of the premises during an eleven-year period. The Court noted that “… the bakery ovens were left in place, and no structural alterations were made which might have prevented the eventual reestablishment of the bakery. Proof of abandonment must be borne by the asserting party”. The Court in Richards went on to state that “… the abandonment of a nonconforming use ordinarily depends upon a concurrence of two factors: (a) An intention to abandon; and (b) some overt act, or some failure to act, which carries the implication that the owner does not claim or retain any interest in the subject matter”. The Court further emphasized its prior findings on the issue of abandonment in Washington Arcade Associates v. Zoning Board of Review of the Town of North Providence, 528 A. 2d 736 (R.I. 1987), by holding that “An involuntary interruption of a nonconforming use such as an economic depression or a fire does not establish the requisite intent to abandon because the cessation of the use is not a voluntary act of the user.”
In addition to the owner voluntarily discontinuing a legal nonconforming use, the owner may also evidence its intent by affirmatively changing or expanding the structure or purpose of the legal non-conforming use.


In some jurisdictions, the legal non-conforming use of a structure may be brought to an end based upon the structure’s useful remaining economic life. In this scenario, a calculation of the present value of the legal non-conforming use is made over the course of a set period of time. Once the calculated value of the legal non-conforming use reaches zero, the legal non-conforming use status terminates. This caveat to the continuance of the legal non-conforming use status is typically applied to billboards and junkyards. As with destruction and abandonment of a legal non-conforming use, it is important to carefully review the provisions of the zoning ordinance or building regulations in the jurisdiction to determine the applicability of the caveat of amortization in connection with preserving the status of a structure as a legal non-conforming use.

The foregoing discussion is not intended to be exhaustive; but, rather, is merely intended to raise potential issues associated with certain affirmative actions or occurrences that may result in the discontinuance or termination of the legal nonconforming use status of a structure or real property. It is always wise to consult a knowledgeable attorney when confronted with legal issues that may have serious or unintended consequences.

Kick it Up a Notch


by Denis Robichaud

Competition for consumer attention has never been fiercer than it is in this economy. Negotiating that idea with your seller is not without its challenges but can be supported by two key statistics: 84% of people use the internet during their home search and 73% of people drive by or view a home they see online. The Real Estate community has been wise to adapt and integrate “mini-sites” or mini-websites.

Of course the ultimate goal of any website should be to generate interest, drive traffic and ultimately close the sale. With a mini-site we can work to maximize the reach of a listing while targeting specific buyers with information and visuals that typical resources may not allow. With the movement to online only shopping, and data like that featured above, we can more effectively guide and focus our efforts for a listing.
If we consider all of the important design elements as tools to help us leverage our online presence, we would take notice that high performing mini-sites employ a few powerful tools when executed well.

1. Create a consistent look. A single well-branded look that engages your target customer is invaluable. With consumers judging businesses and services online before even reaching out, you have to put your best foot forward as a reputable organization.

2. Wow us in pictures. We’ve all heard the old cliché, “A picture is worth a thousand words.” Try not to be lured by the convenience and ease of your mobile device and invest in the power of a high quality architectural photographer who can highlight the details of your listing and capture the true charm and character of a home.

3. Make it real. Build interest by integrating high definition video of your listing. This is another area where finding people with professional equipment and experience can pay off. A well done fly-through of your listing can generate more interest and excitement for the property.

Marketing your listings to online users via a strong mini-site can emphasize your property while supporting your company. Embrace new technologies that can differentiate your business and elevate your brand in the marketplace, it is the competitive edge you are looking for.

Denis Robichaud Design

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