Massachusetts Governor Baker recently signed into law a change to the taxable nature of short term rentals. This affects many of the property owners on Cape Cod who rent for less than 31 days in the summer months. Some relevant information can be found on the Massachusetts Association of Realtors website here but a quick synopsis is as follows:
New Tax Changes:
- State: 5.7%
- Local: up to 6% (6.5 for Boston)
- 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)
- Takes effect July 1, 2019. Bookings made before January 1st, 2019 are exempt.
- Realtors who manage the rental bookings and collect the rent will likely be responsible for collecting the tax.
- Guidance and more details will follow from the IRS and state authorities.
We'll be keeping a sharp eye on this matter and updating you when we learn more information. As always feel free to contact us with questions about how this will impact your rentals or your property management needs.