Short Term Rental Laws, 2019
With the new year comes new laws and taxes for short-term rentals in Massachusetts whether it's for Airbnb, VRBO, or other short-term rentals. The law goes into effect July 1, 2019 and applies to rentals for a period of 31 days or less.
This new law was signed by Governor Baker at the end of 2018. It applies the state's hotel and motel tax to the short-term rental of single family and multifamily units. It is the owner's responsibility to collect and pay the taxes to their local city or town as well as to the Massachusetts Department of Revenue. The exact location of the property determines the tax rate. The state tax rate if 5.7%. The local tax rate can go as high as 8.75% with an additional fee for professionally managed properties. These new taxes do not apply to properties rented for less than fourteen days per year.
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The law applies to bookings made on and after January 1, 2019 for bookings July 1, 2019 and beyond. The law does not apply to annual leases or tenancy-at-will. The individual who collects the rent (owner or agent) must also collect and remit the afore mentioned taxes.
Registration of the short-term rental properties is required with the state. Check with your individual city or town whether a local registration is also required.
Owners are required to carry insurance for their properties. $1 million dollars in liability insurance is required for each short-term rental. The insurance coverage is to defend and indemnify the owner, operator, and any tenants in the building for bodily injury and property damage. Standard homeowners or renters insurance may not cover bodily injury or property damage to a third-party arising from the short-term rental.
Inspection requirements will vary by city and town. The costs for any health and safety inspections must be covered by the owners or operators.
Are you affected by the new law regarding short-term rentals in Massachusetts? Check with the Massachusetts Association of Realtors, marealtor.com/ShortTermRentals for assistance with needed documents. You can also see the Department of Revenue's FAQ page www.mass.gov/info-details/short-term-rentals-frequently-asked-questions for additional information.