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Dec 21 2017

Would the lodging tax be retroactive?

We’ve been getting calls and emails from some homeowners who aren’t sure how to handle their 2018 bookings in light of the potential lodging tax.  If and when it’s passed, is it going to affect previously signed contracts? Or do they need to inform potential or pending guests that they could be impacted? I have now heard from two reliable sources that the tax will not be retroactive.

Jeremy Spittle, Legislative Director for Majority Whip and State Senator Michael J. Rodrigues, made it clear that the tax would not apply to any rental contracts executed before the tax goes into effect, even if the tenancy takes place after the date of enactment.

State Rep. Alice Peisch also confirmed that any leases that you sign prior to the enactment of the tax will not be affected in any way, even if the tenancy takes place after the tax goes into effect.  In fact, she said that it would be illegal to have a retroactive tax. 

This news further underscores the advantage of signing leases early.  We still have no word on when the tax might go into effect, but all indications are that it is not likely to happen until mid-summer 2018 at the earliest. 

As always, we will keep you posted. 

Would the lodging tax be retroactive?
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About the author

Joan Talmadge

Joan Talmadge - My husband Jeff and I created WeNeedaVacation.com in 1997, shortly after buying our Cape home. My background includes teaching fifth grade for 8 years and writing and editing educational publications for 15. I get great joy from helping fellow homeowners successfully rent their homes. Jeff and I are proud to have two of our three grown children working for WeNeedaVacation.com, truly a family-run business. For me, the Cape and Islands are magical all times of the year -- whether it's walking on Nauset Beach, playing golf, or enjoying family and friends. Email Joan

2 comments

  1. Janet London

    Can you please list the most influential people we homeowners can write to to appose the tax on our rentals .

    I will have to sell my house if this goes through because they will be taking my only profit and so will others .

    I need to write now and you please can encourage others to write to specific people asap . I did write to Sarah Peake and received no reply . Julian Cyr lives in my town of Truro but was not sympathetic since I believe as a junior senator he needs to raise revenue for the State . Not fair .
    this was my letter to Sen. Julian Cyr. says ;

    Senator Julian Cyr,

    I am writing to express my opposition to the proposed lodging tax of 11.75 % for the State and 2.5% for the Chamber of Commerce .

    We residents in Truro who have short term vacation rentals depend on rental income as our sole source of income . It would be a total hardship to charge us an extra 11%- 14.2 % extra for many reasons .

    We already pay real estate taxes which for my rental income is over 10% (part of my expenses)

    Our advertising rental sites take over 7% +of our rental income ( on top of a yearly subscription of $300 )

    State income tax is 5.1%

    My Federal income tax is 15%-20%

    ( My town of charges $250. registration fee for my rental )

    This equals about 51% in taxes and fees

    not including all my rental bills, mandatory insurance of $3000 . per year and
    expenses and repairs and maintenance,which alone comes out to about
    40-50% of my rental income per year . (Real estate taxes included on the low end of 40% )
    That leaves a mere 10 % profit or less with your new proposed lodging tax .
    This year i had to do minor renovations to outside of house and thereby I made no profit .
    At that point, it is no longer profitable for me to run a rental business and all the expense and work it entails . Seriously ,If this bill passes I will forced to put my rental house on the market . For people who live in their homes and just rent for the short season, I imagine , it is the same relatively speaking and not worth moving out of their houses and finding other housing.

    Just about everyone I know depends on rental income to live on Cape Cod . I believe it will be a hardship to take our small incomes away from us . I think people will not survive here . I have been hearing this from all my friends who rent as well.

    Now comes the other point . I could charge my clients and extra 14.2 % more to cover this tax BUT that is not possible . My clients balk at $50. increase per weekly rental . For an average rental of $2500. per week that is and increase of $350. That is just a joke . I would lose everyone of my repeat people and new people will not accept an increase of more that $50-$100. for any decent rental house . For example ,On an average rental of $2,500. weekly , a $50. increase per week is a 2% increase. This represents the maximum people can accept per rental week . a 14.2 % hike per rental weekly l is not possible in our world . We are not corporations that get tax breaks . In fact if the State wants to raise revenue how about hitting up the top 1% that are trying to take our health care away to pay for their own 15% tax brake. That’s a better idea !
    I would worry about this as well from a political stand point that this lodging tax is not in the interest of Cape Cod constituents .who are just trying to survive here .
    One other point is that I am totally against the Chamber of Commerce having any part of this . I am not a member nor would I ever support their right wing agenda . They in no way bring me any of my business and have no right to demand a mandatory tax on my small rental business.
    I hope you consider my opinions and personal reasons for opposing the lodging tax . I here below also attach links for other articles that support my beliefs based on facts and opinions of others . Thanks you for your attentiveness in this and other matters . I hope you will change your mind in supporting this lodging tax in its entirety . Sincerely Janet London Swain . Truro Cape Cod .

    http://www.capecodtimes.com/opinion/20170405/lodging-tax-will-gut-tourism-industry
    Lodging tax will gut tourism industry – Opinion …

  2. ALI AMELI

    Hi Joan,
    I really likely Weneedavation.com site. I hope you never sell it especially to the VRBO/Homeaway company. I talk to people who use those sites, I use it too but my satisfaction is very low as opposed to your site which is great!
    Best,
    Ali

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