Vacation rentals on Cape Cod have been undergoing significant changes in the past 9 months. Here is a quick update on the recent developments. For more information we encourage you to visit the Massachusetts website of FAQs here
What is a short-term rental?
According to the Commonwealth, "A short-term rental is an occupied property that is not a hotel, motel, lodging house or bed and breakfast establishment, where at least 1 room or unit is rented out by an operator through the use of advance reservations. A short-term rental includes an apartment, house, cottage, and condominium. It does not include property that is rented out through tenancies at will or month-to-month leases. It also does not include time-share property. A short-term rental is a rental that is not for more than 31 consecutive calendar days. The new law imposes state and local excises on short-term rentals of property for more than 14 days in a calendar year, starting July 1, 2019 for which a rental contract was entered into on or after January 1, 2019. "
Taxes can be as much as 17.45%
All municipalities in the Commonwealth are subject to the 5.7% room occupancy tax.
Towns can choose to impose two additional taxes. First is the local excise tax which can be anywhere from 0 to 6%. Second is a Community Impact fee which can be anywhere from 0 to 3%. Check the database here for your town or see below for all 15 Cape Towns. Additionally the Cape Cod and Islands Water Protection Fund excise is 2.75% (currently no town on Nantucket or the Vineyard are subject to this).
Owners are now obligated to carry $1 million in liability insurance on each property. Each property must be registered BY THE OWNER through MASS tax connect and tax must be remitted by the 20th of each month for the previous month's stays. A full list of owner requirements is listed here.
What's being considered for the future?
As of right now (11/7/2019) Community Impact Fees have not been implemented in any Cape Cod Towns. However it behooves owners to read the First and Second Local Options of this FAQ from the State. In these instances towns can add up to 3% Community Impact Fees if units are professionally managed. If a tax of 17.45% sounds unreasonable, please consider speaking with your local representative to share your opinion.
|Municipality||Current Rooms Tax Rate||Current Rooms Tax Effective Date||Pending Rooms Tax Rate||Pending Rooms Tax Effective Date||Short-term Rental Community Impact Fee Rate||Short-term Rental Community Impact Fee Effective Date||Short-term Rental Professionaly Managed Option||Short-term Rental included within 2-3 Family Home||Cape & Islands Water Protection Fund Tax Rate||Cape & Islands Water Protection Fund Effective Date|
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