As most of you are aware, the new MA short-term rental tax for occupancy beginning on or after July 1, 2019, went into effect on January 1. Any contract you enter into with renters for this summer (7/1/19) and beyond must require the tax – unless the lease was signed prior to January 1, 2019.
For details regarding the tax, view our Lodging Tax FAQ’s page , which we continue to update as we learn more.
Our belief is that this will not change the overall demand of rentals on the Cape and Islands. There will still be just as many people coming over the bridge as ever before, and they will need your rentals to stay in. They may select a less expensive home than they normally would, knowing that they will pay an extra tax on top of the rent. But this means that they may also be considering your home as it’s LESS than ones they’ve rented in the past.
What steps do you need to take to comply?
- Edit your lease template adding a line item for “Lodging tax.” There is no need for you to provide the specifics, e.g. state, town, wastewater, etc. As of this writing, the local taxes will be based upon the current tax each town levies on its hotels, motels, inns, and B&B’s. See our blog post to view a list of towns and their current lodging tax.
- Register your home: SinceJuly 1, 2019, the Department of Revenue has enabled homeowners to register their rental properties on the MassTaxConnect.com website. Some towns, however, already require registration and fees. See the list of towns requiring registrations and fees.
- Review your insurance policy or contact your insurance agent to make sure you are adequately covered, including the new requirement of at least $1 million liability coverage. Unfortunately, if you are insured by the MA Fair Plan, it limits its coverage to only $½ million. We suggest you contact either the DOR or Senator Cyr for their recommendations as to how you can resolve this problem. (See the Resources section at the end of our Lodging Tax FAQ’s post for their contact information.)
- Be prepared to inform your guests about the tax: It’s impossible to know with any certainty how vacationers will react to this tax – probably not too enthusiastically! But all of the other New England states, along with popular destinations like Florida, already have such a tax, so the market is becoming more accustomed to paying it. Some vacationers will undoubtedly object, but many will not. Like all situations with tenants, you will need to handle them individually.
- Use this tax as incentive to book May and June vacations: Any stays that START prior to July 1, 2019, are EXEMPT from the tax, including the week of June 30-July 6, the Fourth of July week! That week is traditionally a pretty difficult week to rent (second only to the last week in August). So post a free Owner Special urging vacationers to save the tax this year if they book anytime that week or earlier.
Despite the tax, we look forward to working together with our homeowners for a successful 2019 rental season ahead!
Joan
Are there forms for remitting the taxes to the different taxing authorities –state, local, water? after they are collected from the renters
Yes, Bruce, when you remit the taxes you’ve collected each month to the Mass. Dept. of Revenue, THEY know what town your rental property is in and will forward the appropriate amount of funds to the town and to the Wastewater Treatment Fund for you.
Hi Joan, I have several contracts for this year starting AFTER July 1st. These contracts were signed and paid for in 2018, and I was under the impression they were exempt from the tax because of that. I just want to confirm this is still correct. Thanks
Hi, Ann, Yes, this is correct. Any leases that were signed PRIOR to Jan 1, 2019, are indeed exempt from the taxes for this year.
This was very informative. Thank you.
You are very welcome, Ron!
Joan,
Once again, thanks for all your excellent efforts. I belong to the Wellfleet Non-Resident Taxpayers Association., and, as you probably know , they provide very little help and representation in such matters as this. Thank God for you and the WeNeedAVacation organization.
Bob Read
Thank you, Bob. It’s been quite chaotic since the tax bill was passed, and we feel a responsibility to our homeowners to try to keep them informed. We’ll get through this!
Joan
I do not rent for more than 14 days so I believe I am exempt from the tax. Isn’t that true?
Yes, Margaret, it is true. If you only rent for 14 days or less, you are exempt from charging your guests the tax. You do, however, still need to register your home with the State.