Updated: Mar 14, 2019
Sadly, for short-term rental owners and guests, the free ride is over in Massachusetts. The legislature passed a new law, signed by the Governor, that taxes Airbnbs just like hotels. Almost more significantly, the law also imposes stringent new requirements on rental hosts.
What properties are covered?
All short-term rental properties, whether rented directly or through HomeAway, Airbnb, or VRBO, are covered by the law. The few exemptions are:
· Any reservation made before January 1, 2019
· Any stay before July 1, 2019
· Properties with less than 14 nights rented in the calendar year
· Stays of more than 31 days
What’s the tax?
Technically, it’s only 5.7%. That’s not so bad, but local municipalities can add their own tax up to an additional 6%. On the Cape? Barnstable County will be tacking on yet another 2.75%. That that makes this year's beach vacation 14.45% more expensive than last year.
What’s the registration requirement?
The commonwealth is building a statewide registry for all short-term rental properties, though the details are still being worked on. Individual towns will also be allowed to create their own registries, and many are expected to do so.
What’s the insurance requirement?
Every short-term rental owner must carry at least $1,000,000 in liability insurance. There’s some good news here, though. Your current insurance may very well already meet that coverage requirement. Furthermore, many online platforms such as Airbnb provide this to hosts.
How will this work?
The registries are still being built by the state and towns, as is the infrastructure to remit the collected taxes. So, the details are still very much TBD.
What else does this mean?
Unfortunately, this could open the door to even stricter state and local restrictions on short-term rentals – or even bans. At NextHome Titletown, our advice for short-term rental properties is to always factor in the regulatory risk. What works for your investment today may not work for tomorrow.