On December 31, 2018, Governor Charlie Baker signed into law a bill that subjects certain short-term property rentals to the Massachusetts room occupancy excise tax. The new law imposes tax on short-term rentals of property for more than 14 days in a calendar year, starting July 1, 2019 for which a rental contract was entered into on or after January 1, 2019. The main impact of this new legislation is expected to be felt by rentals made through services such as Airbnb.
While the Massachusetts Department of Revenue anticipates issuing detailed guidance to further explain this new law, some information in the form of frequently asked questions has been posted by the state. The new legislation classifies a short-term rental as an occupied property that is not a hotel, motel, lodging house or bed and breakfast establishment, where at least one room or unit is rented out by an operator through the use of advance reservations; including houses, apartments, cottages, and condominiums. Also, the state defines a short-term rental property operator as an owner, lessee, sublessee, the holder of a mortgage, licensee, or anyone else operating a short-term rental.
In addition to the state excise tax of 5.7%, other local taxes may apply. A summary of these local taxes is available within the frequently asked questions.
If you have questions about the Massachusetts Room Occupancy Excise Tax, please contact a member of your DGC client service team, or Steve Minson, CPA, MST at 781-937-5120 / firstname.lastname@example.org or Richelle Maguire CPA, MST, AEP at 781-937-5140 / email@example.com.