Governor Baker signed a bill to tax and regulate short term rentals in Massachusetts on Friday, December 29.
The North End’s own Rep. Aaron Michlewitz helped lead the negotiations to bring together the Mass. House, Senate and Governor’s Office. It requires hosts to pay the same 5.7% lodging tax that is paid by hotels, unless they rent out less than 14 days per year. All hosts, regardless of how many rental days, will need liability insurance and to be registered in a public registry. Cities and towns will also be allowed to impose their own local tax up to 6% (6.5% in Boston). Read more details about the bill here.
Cities and towns can raise an additional 3% on second units (or more if the municipality allows), with a significant portion of that revenue going to affordable housing. Massachusetts will be the first state in the country to require a portion of revenue from short term rentals to be used for affordable housing. Boston’s ordinance, passed in June 2018, will allow for a second unit by one owner, and so the city will have to decide whether they want to take advantage of the additional revenue.
The state taxes are scheduled to go into effect July 1, 2019, along with all the safety and insurance requirements. Registration will not be required until September 30 to give the state time to construct a public registry and capture existing short term rentals.
The state bill will not change Boston’s city ordinance on short term rentals, which bans short term rentals from non-owner occupied buildings, eliminating investor units and absentee landlords.
The City ordinance was passed by the Boston City Council on June 13 and signed by Mayor Walsh the following day. It was set to go into effect January 1, 2019 with a provision allowing current lease holders operating short term rentals to continue operating until September 1, 2019. However, due to the recent lawsuit by Airbnb, the city has indicated it may not enforce regulations while the suit is pending in court.