Understanding the Massachusetts Vacation Rental Tax: Answering Your FAQ’s

Earlier this month, the Massachusetts state legislature passed and Governor Baker signed the new short-term Massachusetts vacation rental tax. How does this impact your vacation plans or your plans to rent your home? Our vacation rental agents answer all your questions below. 

What does the law require?Massachusetts vacation rental tax

The new law expands the state’s hotel and motel tax to include the short-term rental of homes. The tax applies to all rentals that are for 31 days or less. Year-round renters and tenancy-at-will are not taxed by this bill.

If you rent your home for fewer than 14 days per calendar year, the tax does not apply.

When does the tax take effect?

The new tax will go into effect for all vacation home rental leases signed on or after January 1st, 2019, and will apply to rental stays beginning on July 1, 2019. If you signed your lease prior to January 1, you are exempt from the tax.

How much is theMassachusetts vacation rental tax tax?

The new tax has both a state and local tax component. The current state tax  is 5.7%. In addition, each town’s existing hotel lodging tax will be added on. A 2.75% tax is also added to all Cape towns for the Cape Cod and Islands Water Protection Fund. All total, the tax currently varies between 12.45-14.45 percent, depending on your town’s individual hotel lodging tax. This may vary depending on if individual towns lessen or increase their tax. Off-Cape rentals would not exceed 11.7%. A full list of tax rates can be found here.

Town Total Tax Rate
Barnstable 14.45%
Brewster 14.45%
Chatham 12.45%
Dennis 12.45%
Eastham 12.45%
Edgartown 12.45%
Falmouth 12.45%
Orleans 12.45%
Provincetown 14.45%
Sandwich 12.45%
Truro 12.45%
Wellfleet 12.45%
Yarmouth 14.45%

Who is responsible for remitting the tax?

For those who rent their homes through Robert Paul Properties, Robert Paul will add the tax to the lease and remit the taxes directly to the Internal Revenue Service on your behalf. The law requires intermediaries (which includes Realtors® who post the property for rent online) who enter into a written agreement with the owner or operator to collect rent or facilitate the collection or payment of rent on behalf of the operator to collect and remit the tax.

Who should I talk to with more questions?

We understand that this can be a confusing process. Our knowledgeable vacation rental agents are happy to help you with any of your questions! Contact them today for more information about renting.

View more FAQ’s from the Cape & Islands Association of Realtors here.