Massachusetts Short-Term Rental Tax Guide for Owners
- HelmsBnB Marketing
- Nov 5
- 4 min read
In the midst of the craziness of foliage and prepping for the upcoming ski season at a lot of HelmsBnB properties, we’ve gotten a lot of questions about Short Term Rental Taxes and we thought doing a short series on how to handle tax requirements in each state might be helpful for our clients and home owners. Today, we’ll tackle Massachusetts and its Short-Term Rental Tax Law that took effect in January 2019, but check in for updates on other states as well.
Please note that these are general guidelines collected directly from the source - if you have specific tax questions, you should consult a professional in your area.
Massachusetts Registration: Short-Term Rentals
Diving in, one of the first things to know is that in Massachusetts, any short term rental owner is considered an operator and must register as one with the Department of Revenue (DOR). Prior to listing, you must provide us with the Certificate of Registration number obtained through this process. First, you have to register as a business with MassTaxConnect through this link: Register as a business. If you already pay Massachusetts taxes, you will follow separate instructions also included at this link.
Additionally, your town may also require a separate registration. Here are the towns on the Cape that currently require registration and some more information on each requirement.
Please note for bookings through sites like Airbnb, the state taxes are charged to guests and paid automatically through the system and are not subject to separate payment. HelmsBnB will help you navigate this.
FAQs About the Short-Term Rental Tax Law
What does the Massachusetts tax law require of me as an operator?
The law issues a tax on all short-term rental homes and condos. As in most states in which HelmsBnB has a property, Massachusetts defines a short term rental as any period of 31 days or less. If you have long term rentals, they aren’t subject to this tax.
What if my local town either increases the excise tax or introduces a new fee?
Several towns have done so and your property is subject to that new fee or tax for any bookings that occur after it’s enacted - simply put, you are not grandfathered in if you were renting your property before any new tax or fee went into effect.
From the DOR website:
"If an occupancy occurs after a rate increases or a new fee is imposed, whoever collects the rent must collect any amounts due from occupants that were not paid prior to occupancy. Lease contracts should include provisions that all state and local taxes and fees are due as of the date of occupancy, so occupants are aware that additional amounts may be due if rate or fee changes occur after a contract is signed. Whoever collects the rent is responsible for the payment of the tax or fee due based on the effective date of the change, not the date a contract was signed or any money was collected."
How much is the tax?
The tax is the total of these taxes:
State tax: 5.7%
Local tax: up to 6%. WeNeedAVaction provides a handy chart of Short-Term Lodging Tax Percentage by Town so you can not only see what you owe on your current property, but can also factor this in on any new properties you might be evaluating.
For our Cape Cod clients - you are also subject to the Cape Cod and Islands Water Protection Fund excise tax: 2.75% (As of right now, , Martha's Vineyard, Nantucket and "Just off Cape" properties are exempt.)
A town can choose to assess an additional 3% Community Impact tax for clients who own multiple properties there..
Are there any exemptions to the law?
If you rent your home for 14 days or fewer per calendar year, you are exempt. However, you are still required to register your home and provide proof of insurance.
When and how do I remit the tax?
The tax is due to the state via the above registration link by the 30th day of the month following the rentals. So all of your May bookings would be due by June 30th etc.
What form of payment will the Department of Revenue accept?
You can pay from your checking or savings account, or with a credit/debit card for a 2.35% processing and convenience fee.
I usually rent my home short term but occasionally have long term rentals in slower months - what do I do?
You are required to pay the tax on your short term rentals, following the same guidelines outlined above. You do not need to do it for any rentals longer than 31 days.
What items are taxable?
Taxable items include the rent and any other non-refundable charges, including cleaning, linen, or pet fees - don’t forget to include those in your totals for each month.
Does any of this tax come out of my pocket?
Only if you choose to and/or forget to include it in your booking fee. Remember that A. Lodging taxes are extremely common, both in the US and abroad and B. All Massachusetts properties are subject to the same fees, so don’t worry about losing bookings because of it.
Am I required to carry insurance for my home?
Massachusetts law requires homeowners to maintain a minimum of $1M in liability insurance to cover a rental home. If you are at all concerned that your current policy may not meet the minimum, we recommend you contact your agent ASAP.
Do I need to do a $0 remittance in months with no Short Term Rentals?
No - only in months in which you had guests for less than 31 days.
Disclaimer: This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors.
If you have questions or need assistance with your short-term rental, don't hesitate to reach out to us at HelmsBnB. We are dedicated to helping you navigate the challenges of short-term rental taxes, ensuring your success in this growing market.
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