Scheduled to take effect in July 2019 (applying to bookings made after January 1 2019) the new tax on short term rental properties is in line with what many other states have already implemented. The Act does not apply to annual leases or tenant-at-will agreements.
What does the Act apply to?
The Act will affect all short term rentals of 31 days or less regardless of whether it is for personal, business, or recreational use. Annual lease and tenancy-at-will agreements are not covered by this bill.
What is the new tax rate?
The state has set it's rate. Local municipalities have the option to implement an additional rate. There is an additional fee covering Cape Cod and Islands, as well as a community impact fee assessed on professionally managed properties.
State: 5.7%
Local: up to 6% (Boston 6.5%)
Cape Cod & Islands: includes additional 2.75% to fund Cape Cod and Islands Water Protection Fund
A community impact fee of up to 3% may be assessed locally on professionally managed properties (Owners of two or more units in one town).
Are there any exemptions to the Act?
The Act does not apply to properties that are rented for fewer than fourteen (14) days per year.
What else does the Act require?
Owners are required to maintain a $1 million dollar liability insurance policy on each short term rental. Each short term rental must also be registered with the State. Local municipalities may also require registration as well as health and safety inspections.
Review the entirety of the new act with your attorney in order to fully understand the affect to your properties. The "Act Regulating and Insuring Short-Term Rentals" can be found here:
https://malegislature.gov/Laws/SessionLaws/Acts/2018/Chapter337
