Short Term Rental Tax Info

Massachusetts has adopted a new law taxing and regulating the short-term rental market —

What does this new law require?
This new law expands the state’s hotel and motel tax to include the short-term rental of homes (condominiums, single family, multifamily, etc.). Massachusetts is one of the last states to adopt this type of tax. The tax applies to all rentals for a period of 31 days or less, regardless of whether the rental is for recreational, personal, or business use. At the insistence of MAR, the new law only applies to short-term rentals, meaning ordinary tenancies, such as an annual lease or a tenancy-at-will, are not covered by this bill.

Tax Structure
The short-term rental rate varies by locality and is the total of the following rates:

• State: 5.7%
• Local: up to 6% (Boston 6.5%)
• Cape Cod & Islands: includes additional 2.75% to fund Cape Cod and Islands Water Protection Fund
• A community impact fee of up to 3% may be assessed locally on professionally managed properties (Owners of two or more units in one town).

The law requires regulations to minimize the administrative burden on tax filings for those who only rent their unit five (5) months or less each year.

For more information visit http://www.marealtor.com/members/legal-resources/short-term-rentals

The Massachusetts Association of REALTORS  should help Realtors® navigate the short-term rental market under these new laws and regulations. For additional information, see the Department of Revenue’s FAQ page.