Legislature agrees on short-term rental taxes, regulation

After more than three months of talks, House and Senate negotiators reached agreement this week on important legislation to tax and regulate increasingly common types of short-term rentals, such as Airbnb rentals, that do not currently fall under the state’s room occupancy statute.

The Legislature sent the final compromise bill (H. 4841) to Gov. Charlie Baker on July 30. Baker has 10 days to sign the bill, return it with proposed changes or veto it. The MMA has asked the governor to sign the bill.

[Read the MMA’s letter to the governor.]

The bill would extend the existing room occupancy excise under Massachusetts General Laws Chapter 64G – which applies to hotels, B&B establishments and similar rentals – to newly-defined short-term rentals that are not currently taxed, including rentals through web-based companies such as Airbnb.
These new types of rentals would be subject to the state’s 5.7 percent room occupancy excise and the local option excise of up to 6 percent.

The bill would also allow cities and towns, by vote at town meeting or by city or town council, to impose a community impact fee on “professionally managed” rentals and certain multi-family units.

The legislation would impose an additional 2.75 percent room occupancy excise in towns on Cape Cod and the Islands to help pay for water pollution abatement projects in the region. It would also grant authority to cities and towns to regulate short-term rental operators through local ordinances and bylaws.