Short-term rental bill to ‘greatly’ impact Edgartown

Town selectmen get briefed on potential tax revenue.

18
MVC executive director Adam Turner gave Edgartown selectmen a heads up about an upcoming State bill for short-term rentals. — Brian Dowd

Martha’s Vineyard Commission executive director Adam Turner gave Edgartown selectmen a briefing on a short-term rental tax bill that is expected to pass in January.

If approved, House bill 4841, An Act Regulating and Insuring Short-Term Rentals, would give towns a local option on short-term rentals. Towns would have the authority to put up to a 6 percent tax on people who rent their houses for less than 30 days. Whether the Island towns decide to add the tax, the state will take an additional 5 percent cut, Turner said.

Turner believes the bill will pass, saying short-term rental businesses such as Airbnb are a “significant” part of the bill. “This is probably going to happen,” Turner said. “It will impact the town greatly.”

The bill is expected to be one of the first items state legislators work on in January. If the bill passes, it would not go into effect until 2020.

The town would have to complete a state-mandated inspection and registration on all short-term rental units, which Turner estimates to be around 4,000, to meet state requirements such as insurance and smoke alarms. For 1,800 seasonal weekly units rented at $3,000 a week for nine weeks, Turner estimated the town could collect close to $3 million annually if the 6 percent tax was authorized. “It’s going to be in the millions,” he said.

Turner also thanked state Rep. Dylan Fernandes and Sen. Julian Cyr for their efforts to allow the Cape and Islands to opt in to an additional 2.75 percent tax on top of the 6 percent tax that would go toward a Cape Cod and Islands Water Protection Fund to create wastewater management systems to clean up nitrogen pollution. Cape Cod towns are legally required to create wastewater management systems due to a 2011 lawsuit filed by the Conservation Law Foundation. The tax will be applied equally to short-term rentals and traditional lodging in Barnstable, Dukes, and Nantucket counties.

Currently, the town collects a 4 percent tax from hotels — the 6 percent and 2.75 percent tax would be an expansion of that.

In other business, Edgartown School Principal John Stevens asked the town to accept a $8,000 donation from an anonymous family for the school garden program. The donation would supplement the salary of the garden coordinator.

Selectmen unanimously agreed to accept the donation. Selectman Margaret Serpa asked Stevens to extend a thank-you to the family.

“This family has given us this donation in years past, and continues to do so. They really believe in the Island Grown Initiative and the school garden program at the Edgartown School, and we very much appreciate it,” Stevens said.

18 COMMENTS

  1. Leveling the playing field for hotels makes sense. Requiring safety inspections makes sense. An additional 2.75% for wastewater treatment seems like it aligns cost and use. But don’t fool yourself, AirBnB is not paying the price – people who own homes on the Vineyard will pay.

  2. No. It will simply drive down the rental business into the black market and people will find ways to rent under the radar. MV hasnt been able to control zoning and domicile per capita occupancy and it wont be able to get much out of taxing people who rent their homes. The property tax these owners pay already is far greater than the benefits they get since they dont have children in schools.

  3. Incorrect. Today a hotel quotes $300/night for a room and the bill reads $300 + the state & local tax (5.7% state + 4% in Edgartown, I believe = $29.10). This will be the same. The tenant pays, not the property owner. Yes, it may have some small effect on sales, but most folks spending $3000/week or more will not blink an eye, in my opinion. And the state requirement for inspections will tend to make such units safer.

  4. Not true. People who own on the Vineyard past the cost on to those that rent. People might see this added level of paperwork to self report their numbers to the state MIGHT opt for a year round local person over a seasonal renter ( week to week).

  5. Maybe the homeowners using realtors to rent their homes will be forced to collect/pass along the tax revenue. But I’d venture a guess that many homeowners who rent on their own without an agent will ignore it. As for enforcement, good luck. How many times has the town enforced the by-law about ‘no more than 3 unrelated persons’ occupying a residence?’

    • Seems easy enough to enforce. Make a list of tax bills mailed to PO boxes or off Island, drive to each property and record tags, check tags for legal residence, send summons to property owners not on record as renting.

      • They are unable or unwilling to enforce current bylaws with respect to number of occupants. We all know of certain rentals with dozens of occupants and they continue to exist despite neighbors complaints. Only police can ‘check tags’ with probable cause. An off-island tag could simply be a visitor for the weekend. Or a week. Or the summer. And unless you see money exchanged, they are here as a guest. Not a chance its enforceable. Its impossible to prove that a vehicle on a property means that its being rented. The only way it could possibly be enforced is to legislate realtors to collect the tax. Good luck trying to get an internet home rental site to do the same.

        • Residency stuff, found this: You may be fined up to $1,000 per year if you illegally register in another state, or misrepresent the principal place your vehicle is garaged in this state. You are also subject to assessment for unpaid taxes with penalties and interest.

          If they remain unable or unwilling to enforce, then everyone is safe. I would never count out local government.

  6. I can tell you what happens when you increase rents. The vacation people just bring more guests. When you get 2 or 3 families in your home backing up your septic system and destroying your house you might think twice about renting it again. Just one rental left on my street no one bothers to rent anymore. Its cheaper just to keep them empty.

  7. Yes most online rental companies will collect the tax. However, few will rent year round as suggested since they use the home themselves. There was a suggestion to make this apply to homeowners who own more than one Rental home in MA, but alas the money is too tempting. What will this do? Some won’t rent again which is a shame because that means less visitors and less business for real estate agencies on island. The towns will want extra insurance and extra safety measures despite the fact that there are no issues currently with short term rentals. The hassle will be too great for the homeowners who won’t rent or worse, will sell to developers and investors. You reap what you sow!

  8. This won’t open up longer term rentals – we will just pass it on to the guests. An unfortunate way for the state and towns to raise some extra cash, nothing more. If you use a realtor your cash is already in the open, but for those going under the table nothing really changes.

    • This revenue should be used to directly fund low-medium income housing projects and the infrastructure to support them. That would be the best use of the extra funds and I am hoping that’s what the towns are already planning on doing with it.

Previous articleMVRHS seeks additional support for English language learners
Next articleSMAST workshop coming to West Tisbury