Short-term rentals now taxed in Massachusetts - you should hear the owners screaming!

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seashanty's picture
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Short-term rentals now taxed in Mass. Patriot Ledger (copied below)

You should hear the owners screaming. "unfair, what if the guy down the street doesn't charge tax, my place will cost more, my guests will stay someplace else" .... The sharper of the bunch also recognize that some or all of the income they've been 'hiding' will be more apparent. What's next ... regulation? Permits? INSPECTIONS?  Owners telling on those who don't pay? The state sees revenue, I see it as leveling the playing field for the little inns and legal rentals that have been squeezed so badly. For decades people have been renting out their cottages, camps, houses and rooms on Cape Cod and most recently there's been an explosion of those rentals on Air. We also have a lot of investors who swoop in, buy properties and drive up prices, do the minimum of repair and maintenance and basically open up a house-for-rent. On the 'side'. While a permit was denied to a couple trying to open a nice little bnb with two guest cottages, a house just down the road from them is continually rented out on air. I told the couple trying to open the bnb, open an Air! No permit required! 

Sorry, not sorry!

Here's the article: 

"Renting a beachfront cottage in Marshfield or an apartment in the city for a weekend getaway is getting a little more expensive — 5.7 percent more expensive, to be exact.

A new statewide tax on short-term rentals in Massachusetts kicked in Monday as part of the Legislature’s effort to regulate the lucrative short-term rental market, which has grown into big business in Boston and surrounding communities in recent years, further squeezing the region’s housing shortage.

The law, signed by Gov. Charlie Baker in December, has irked property owners who earn extra money renting out rooms, or entire homes, on websites including Airbnb, VRBO and HomeAway, but advocates of the law say it’s a first step in reclaiming some of the housing stock that’s been lost to short-term rentals, which they say has contributed to rising rents across the region. The law extends the 5.7 percent state and local room occupancy taxes, like those levied on hotel stays, to units rented for 31 or fewer consecutive days. Units rented for 14 days or fewer in a calendar year are exempt, and the tax is not required to be collected if the total rent is less than $15 per day.

With the tax now in effect, a two-bedroom cottage on Blacks Creek in Quincy offered for $180 a night, plus fees, also included a $42 tax for a two-night stay. A week at a cottage for four just outside Humarock in Marshfield, listed at $274 a night plus fees, carries a tax of $162.

The first tax bills for short-term rentals will be due Aug. 20, and after that returns will be due on the 20th of each month, according to the Department of Revenue. Legislators expect $28 million in revenue from the short-term rental tax. The law also promises to bring new cash flow to communities such as Quincy and Braintree, where an additional local tax is already collected on the rental of hotel and motel rooms. Those same terms now automatically apply to short-term rentals.

In Quincy, the city council also took steps to further tax property owners with two or more properties engaged in short-term rentals, imposing a 3 percent community impact fee.

At the time, Ward 4 City Councilor Brian Palmucci said the law was meant to target “professional” real estate investors who buy multiple properties to rent through apps like Airbnb, which can often be much more lucrative than traditional monthly leases. But until property owners register their short-term rental properties with the state Department of Revenue, it’s hard to say how much cash will flow to the state and cities and towns where a local tax applies. Short-term rental operators are required to register with the Department of Revenue using MassTaxConnect before offering their properties for rent after July 1. A department spokeswoman said on Monday it was too soon to provide information on the total number of short-term rental properties registered in the state or by community."

 

 

cloudbedsna's picture
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I live in an area where lodgers' taxes are required for anyone providing lodging, VRs included. At first there were a lot of complaints, and frankly even now, there are still many that operate out of compliance (our city requires a paid permit, too), but as the call for affordable housing has reached a fever pitch nationwide, vacation rentals are going to be targets. It's about time, and these owners better get used to playing on at least a little more level playing field with the pro's, i.e., inns, B&Bs, hotels. Fair is fair, am i right?

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Silverspoon's picture
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The screaming and gnashing of teeth are non-stop in this vacation destination.  Second homeowners, scrambling to get the $1,000,000 of liability insurance are crying over the returning renters who are complaining about the increase in their total cost.  The tax is 12.45% here for short-term home rentals, inns, B+Bs with more than 3 rooms, motels, hotels.  Only 5.7% of the 12.45% goes to the state while 4% goes to the town and the remaining 2.75% goes to the water commission for appropriate wastewater/water quality projects.

Owner-occupied B+B's with 3 or fewer rooms who have breakfast included in the room rate are exempt from collecting the tax. wink

It's business as usual here.

 

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Arks's picture
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I'm spending a couple of nights in Memphis in October. I'd booked a downtown hotel room at about $350/night. Just a regular hotel room. Nothing fancy, but it's in the heart of the area with Beale Street, the pro basketball arena, the pro baseball stadium, etc. so can command a high rate.

I decided to check Air to see what was available. I found THIS beautiful, upscale apartment very near the hotel, with full kitchen, living room, bedroom, excellent reviews, for $107/night! Check out the 19 photos. He's, justifiably, VERY proud of his kitchen, but there are decent photos of the bedroom and bathroom too. Needless to say, I cancelled the hotel and booked with Air. 

It reminds me of all the old ladies my mother's age who still go get their hair set every week. You don't see many younger folks doing that. I think when the older generation is gone, a lot of beauty shops are going to close. Likewise, when the traditional hotel generation is gone, most of the hotels will be gone too, unless government saves them...and that's looking unlikely.

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Generic's picture
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Around here, because most are illegal, it's they won't show you the outside, won't show you windows... when you check in, you have to hide, say you are staying with a friend, can't use this, can't do that... it's not worth the hassle.

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PhineasSwann's picture
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Glad to hear it. The tears of formerly illegal renters taste delicious.

Our lawmakers in Vermont are so cowed and corrupted that they keep punting the issue year after year. Meanwhile, illegal rentals are growing while traditional inns are dying left and right. 

Arks's picture
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yes

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I hope this is just step one and the state/city/county continues to push for equality to those who have been 'paying the price' in every aspect from day one. 

They keep talking the talk here in my area, while in the big city near me they have tried a couple of different strategies  which has not worked well.  

Meanwhile FB ads from marketing strategists keep the majority of our feed filled with webinars trying to get more to start more to invest in multiple properties.  One today said so no longer do you need a license to own a taxi or a hotel...then leading to their sales gimmick to a free webinar on how to have multiple STR's.    

Generic's picture
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It's about time. Those taxes pay for real services.

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