By Richard Schwartz, CPA
If you are one of the numerous short-term “Hosts” or “Operators” providing your home to vacationers, business professionals and other short-term renters, be aware of the new tax law that will impact short-term rentals in the Commonwealth of MA. The newly passed legislation will expand the Massachusetts hotel tax to include short-term rentals.
Prior to the new law, Airbnb, HomeAway and other short-term rentals avoided the Massachusetts hotel tax. However, recent legislation in Massachusetts has now leveled the playing field within the Massachusetts hospitality industry. Beginning July 1, 2019 short-term rentals in Massachusetts will now be subject to the 5.7% hotel tax (for any booking done beginning January 1, 2019 and later). The new law will also allow cities to assess an additional tax not to exceed 6% on such rental income. Properties will qualify under the expanded law and will be subject to the 5.7% hotel tax if the rental period will regularly be 31 days or less. However, if the total rental days in the calendar year is 14 days or fewer, the rental property will be exempt and will not be subject to this tax.
To comply with the expanded tax law, beginning in July, 2019 operators will be required to register their property with MassTaxConnect whether or not the property will meet the 14-day exemption or not. If the property meets the 14-day exemption, no tax will be due each year. Otherwise, taxes are due and required to be paid by the 20th day of the following month (for example hotel tax fees collected in July will be required to be submitted by August 20th). The filing of monthly hotel tax returns and tax payments will be through MassTaxConnect.
The link below is from Mass.gov and answers Frequently Asked Questions pertaining to the recently expanded tax law for Massachusetts short-term rentals.
https://www.mass.gov/info-details/room-occupancy-frequently-asked-questions