Deal Struck on Beacon Hill to Tax Short-Term Rentals

August 10, 2018
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Last week Massachusetts lawmakers struck a deal that would extend the state’s hotel tax to Airbnb units and other short term rentals.

Rep. Aaron Michlewitz, who led the charge and was a key figure on Beacon Hill in pushing for short-term rental regulations, said last week that the deal struck among members last week is the ‘first of its kind’ in the nation.

Like the state’s 5.7 percent hotel tax, short-term rentals that are advertised on Airbnb, bed and breakfasts and second homes that owners offer to vacationers, will be taxed at that rate. Again mirroring the state’s hotel tax, cities and towns can add another 6 percent to the 5.7 percent. Boston can go up to 6.5 percent and if the owner of a short-term rental owns more than one unit in a Boston neighborhood like the North End or Beacon Hill, Boston can add another 3 percent tax to the additional units, explained Michlewitz. However, the owner’s first unit would be taxed at the regular rate and all additional units would be taxed at the higher rate in any given neighborhood.

What makes Massachusetts’s regulation unique, explained Michlewitz, is that cities and towns that opt to charge the additional 3 percent tax will have to spend 35 percent of that revenue on affordable housing and transportation.

I’m proud that both the House and the Senate passed our conference committee bill on regulating and insuring short-term rentals, including Airbnb,” said Michlewitz. “This bill will generate at least $50 million in revenue and we will be the first state in the nation to attach short-term Rental funding to affordable housing. I want to thank all those that helped us get to this point over the last four years.”

Mayor Martin Walsh, who had been pushing short-term rental regulations in Boston, applauded Michlewitz and the House’s work.

“I applaud Speaker DeLeo and Rep. Michlewitz for their leadership in crafting a framework for short-term rentals,” said Walsh. “Their statewide approach and tax structure complements the City of Boston law. Together, we will protect long-term housing in our neighborhoods.”

Back in June the Boston City Council voted 11-2 in favor of creating an ordinance to regulate short term rentals like Airbnb.
The ordinance creates a public registry of short-term rentals and completely exempts lodging houses, bed and breakfasts and certain corporate housing with established contracts with educational, medical or other institutions from regulation as a short-term rental.
According to Walsh the ordinance hashed out by his Administration and the City Council takes a three-tiered approach to classifying short-term rental units. These include Limited Share Units that consists of a private bedroom or shared space in the owner-operator’s primary residence, in which the operator is present during the rental. The fee associated with this classification will be $25 per year.
Home Share Unit are defined as whole units available for a short-term rental at the primary residence of the owner-operator. The fee associated with this classification will be $200 per year.
Owner-Adjacent Unit consists of an owner-occupied two- or three-family building, in which the owner lists a single secondary unit as a short-term rental. The fee associated with this classification will be $200 per year.
The regulations also provide protections for the occupants of the short-term rental unit by prohibiting any property with outstanding housing, sanitary, building, fire or zoning-code violations from being listed. In addition, the operator is required to provide notice to abutters of a short term rental unit within 30 days of approved registration.
Non-owner occupants are not permitted to operate short term rentals in their leased units.
The city will levy penalties to any person who offers an ineligible unit as a short term rental, fails to register, or fails to comply with a notice of violation.

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