|The New Massachusetts Short-Term Rental Law Highlights
Legislation was signed into law December 2018 which expands the Massachusetts Room Occupancy Excise Tax to short term rental properties starting July 1, 2019. Below are some highlights and basic information about who needs to file and how to start the process.
For stays starting July 1, 2019 that are booked January 1, 2019 or later. If a lease was signed prior to January 1st, no tax is due.
DURATION OF STAY
For any stays of 31 consecutive days or less.
If the total rental days during the year is less than 14 days, no tax is due, but the property will still need to be registered (see below).
State Tax: 5.7%
Local Tax: up to 6.5% (Click HERE for a list of the current tax rate in each town)
The Cape Cod & Islands Water Protection Fund: 2.75% (for cities/towns that are currently a member of the fund)
Convention Center Finance fee: 2.75% (only for Boston, Worcester, Cambridge, Springfield, West Springfield, and Chicopee)
Every homeowner that rents out their property must carry not less than $1 million of liability coverage for each stay unless the hosting platform provides equal or greater coverage.
TAX REMITTANCE & COLLECTION
The law requires whoever collects payment for the rental to collect the tax and remit it to the Department of Revenue (DOR). This is either the operator or the intermediary.
An operator is the owner, lessee, sublessee, holder of a mortgage, licensee or anyone else operating a short-term rental.
An intermediary is anyone who is not an operator who helps arrange a property rental and charges rent on behalf of the operator. This includes a broker, hosting platform, or operator’s agent (i.e. property manager, property management company, or real estate agent).
Be aware: many hosting sites are not currently collecting and remitting the tax in MA. Currently, Airbnb, HomeAway, VRBO, and Flipkey do not. If hosting on these sites, the owner would be responsible for remitting the tax and filing the returns with the DOR. These sites generally have a way to manually add and collect the occupancy taxes on the listing. For example, click here for how to add to an Airbnb listing.
REGISTRATION & FILING
The operator or intermediary will need to register on MassTaxConnect at https://mtc.dor.state.ma.us/mtc/. Registration will not be available until July 1, 2019.
The MA DOR has created tutorial videos on how to register for an account and how to remit payment. You can find the videos here. Please note, both registration videos are for registering as a business.
If you own the property personally and already have a MassTaxConnect account for your individual income tax, you can add the Rooms Occupancy Tax as an additional tax type to your existing account.
Properties exempt under the 14-day rule will still need to register via MassTaxConnect. The DOR is currently working on the registration process due to the new law.
PAYMENT & FILING DUE DATES
The first return and payment is due on August 20, 2019.
Returns are due on the 20th day of each month thereafter. Please note, a return will need to be filed for each month regardless if the property was rented for that month.
For more information and frequently asked questions, check out the MA DOR Room Occupancy FAQ page for the most up-to-date information. If you need assistance with setting up your MassTaxConnect account, please reach out to your Newburg contact and we will be happy to assist and provide you with further detailed instructions.
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