Short-Term Rental Compliance in Massachusetts

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State Regulation

Massachusetts is a favored destination for short-term rentals, offering a variety of settings from historic Boston to the peaceful beaches of Cape Cod and the scenic Berkshires. The state's short-term rental market appeals to tourists, business travelers, and those seeking a temporary getaway. Massachusetts regulates these rentals, balancing tourism promotion with the preservation of local community character, by imposing taxes and regulations. This regulatory framework is important for both renters and hosts to navigate the state's unique blend of historical charm and modern amenities in the short-term rental scene.

Is there a statewide definition of STR?

In Massachusetts, the state defines short-term rentals (STRs) as any rental period of 31 days or less. This definition encompasses various types of accommodations typically offered through platforms like Airbnb, VRBO, and Vacasa.

Statewide Registration Requirement

Owners of short-term rentals are required to register their properties under the state's short-term rental law. This law designates such owners as "operators". Once registered, operators receive a certificate number, which must be provided to any intermediary (such as rental platforms or agents) that collects rent on their behalf. This is essential for the proper remittance of taxes related to the rentals.

The registration process involves a few key steps. If an owner already has an account on MassTaxConnect, they need to log in and select "Add Account Type/New location" to register for the Room Occupancy Consolidated tax type. For those without an existing account, the process includes creating a username on MassTaxConnect, verifying their identity (typically using a Social Security Number), and then proceeding to add the Room Occupancy Consolidated Tax under their account.

This statewide registration system is crucial for the management and taxation of short-term rentals in Massachusetts, ensuring compliance with state laws and regulations.

For more specific details and guidance on the registration process, operators can visit the MassTaxConnect website or refer to the guidelines provided by local government websites such as Plymouth, MA's official site.

Statewide Tax Requirement

The tax requirements for short-term rentals include a state-wide hotel tax and additional local taxes that vary by location. The state hotel tax is 5.7% and applies to all short-term rentals. In addition to this, local municipalities have the discretion to impose their own taxes. For instance, in Boston, the city tax is 6.5%, and there's also a surcharge tax for the Massachusetts Convention Center Authority which is 2.75%. This brings the total tax in Boston to 14.95%. In other parts of the state, such as the Cape and Islands, the total tax includes a 5.7% state hotel tax, a 6% city tax, and a 2.75% surcharge tax for a wastewater treatment fund, totaling 14.45%.

These taxes apply to various types of short-term rentals, including private rentals through platforms like Airbnb, bed and breakfasts, and similar establishments. It's important to note that these taxes are typically passed on to the renters. Property owners offering short-term rentals are required to register their properties and comply with these tax regulations, including submitting their information to a public rental database. There are also additional insurance requirements for rental units under this regulation.

Is there any other state-wide requirement?

Short-term rental operators must comply with several statewide requirements, including a comprehensive registration process, maintaining a minimum of $1,000,000 in liability insurance, and adhering to local regulations and taxes. The registration process involves providing proof of residency, insurance documentation, and paying annual licensing fees. Additionally, operators must navigate varying local laws in different municipalities, which may include additional taxes and regulations like occupancy limits and homeowner residency requirements. These measures aim to regulate and tax short-term rentals effectively, requiring operators to be vigilant in compliance to avoid penalties.

Massachusetts

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