The short-term rental tax signed into law at the end of last year kicked in Monday, requiring those who rent out short-term lodgings, such as through Airbnb or VRBO, to start collecting the tax.
The bill introduces a suite of taxes, and expands the state and local room-occupancy taxes, which hotels pay, to lodging units rented for 31 or fewer consecutive days.
Units rented for 14 days or less in a calendar year, or units with rent that is less than $15 per day, are exempt from the tax.
There is a 5.7 percent state tax and an up to 6 percent local option tax. There are additional taxes, such as a 2.75 percent wastewater treatment tax, and a 3 percent community impact fee if the homeowner owns more than one rental home in town, but Martha’s Vineyard is currently exempt from the wastewater tax, and towns have not implemented the community impact tax.
The law also requires homeowners to maintain $1 million in liability insurance to cover a rental home.
The first payments for the expanded tax are due August 20. After that, payments are due on the 20th of each month, according to the Massachusetts Department of Revenue (DOR).
People with short-term rentals must register with the DOR.
Joan Talmadge, who co-owns weneedavacation.com, a vacation rental site, with her husband Jeff, told The Times many of her clients had rooms that were booked prior to the beginning of the year and will be exempt, but next year they will have to pay the tax. The large rollout has also caused headaches for some of her clients.
“There is so much confusion about this tax,” Talmadge said. “It really happened very quickly.”
Talmadge and Elizabeth Weedon, a public relations coordinator for weneedavacation.com, said the new tax has adversely affected some people, but overall inquiry numbers on their site are up 7 percent this year, compared with 2017.
“We know that many homeowners have felt the need to reduce their rates in order to fill vacancies. Although there is always some softening of prices as the season starts, it seems so far this season that homeowners are having to either reduce their rates more drastically than in the past — or, as we’ve heard in many instances, they are absorbing the lodging tax themselves in order to secure the last-minute bookings — or both,” Weedon said in an email.
Naysa Woomer, a communication specialist for the DOR, told The Times in an email that operators are required to register with the DOR online through MassTaxConnect, which gives a step-by-step tutorial of how to sign up.
Woomer could not immediately comment on how many Vineyard property owners had signed up since registration began Monday.
Rental Brokers I spoke to say the rental market has been harmed by this tax. We are pricing ourselves too high with these added taxes. Soon there will be fewer jobs and other repercussions as a result of this tax.
Liberals want to tax anything that moves. The more you tax something the less you get of it. People are abandoning high tax states. More under the counter rentals coming soon.
Looks like homeowners will get a break if they had their leases signed before Jan. 1. Next year we will find out if this was a good idea.
In case you don’t know, some renters are exempt from the tax. I did the research a few months ago and according to Mass DoR, there are a few designations for rentals, along with a list of exemptions, including people like me who rent three rooms or less. Unfortunately, AirBnB has chosen to apply the tax across the board to all hosts, regardless of status. I have been in regular contact with Mass DoR who say they are trying to sort it out with Air BnB, but with little success. AirBnB remains adamant about applying the tax to all bookings. There is something quite bothersome (unethical, illegal, and fraudulent?) about collecting a tax from guests that is not due, in my opinion. It’s bad enough the tax law was passed, even worse to be a victim of it when you know you are exempt. I hope this is resolved soon.
I meant to write “people like me who rent three rooms or fewer in our own homes.”
This info is from Mass DoR:
Designations:
“Bed and breakfast establishment”, a private owner-occupied house where not less than 4 rooms are let, a breakfast is included in the rent and all accommodations are reserved in advance.
“Bed and breakfast home”’, a private owner-occupied house where not more than 3 rooms are let, a breakfast is included in the rent and all accommodations are reserved in advance.
“Short-term rental”, an owner-occupied, tenant-occupied or non-owner occupied property including, but not limited to, an apartment, house, cottage, condominium or a furnished accommodation that is not a hotel, motel, lodging house or bed and breakfast establishment, where: (i) at least 1 room or unit is rented to an occupant or sub-occupant; and (ii) all accommodations are reserved in advance; provided, however, that a private owner-occupied property shall be considered a single unit if leased or rented as such.
Exemptions:
*lodging accommodations at a federal, state, or municipal institution;
*privately-owned and operated convalescent homes or homes for the aged, infirm, indigent, or chronically ill;
*religious or charitable homes for the aged, infirm, indigent, or chronically ill;
summer camps for children up to 18 years of age or developmentally disabled individuals;
lodging accommodations, including dormitories, at religious, charitable, educational, and philanthropic institutions; and
*bed and breakfast homes (e.g., homes with three or fewer rented rooms).
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