A few months after initially approving new laws that regulate and tax short-term rentals in the state of Massachusetts, the state’s governor signed the laws into effect late last week.
Back in August, the Massachusetts legislature approved a bill that extended the state’s current 5.7% hotel tax to most short-term rentals, along with giving municipalities the option of tacking on an additional 6% onto the tax; 9% if an owner rents out two or more units in the same community.
The law took aim at the rise of Airbnb and similar short-term rental platforms in the state.
According to MassLive.com, Massachusetts Gov. Charlie Baker said he wouldn’t sign the bill without adding an exemption to some of the bill’s provisions for people who rent out their rooms for two weeks or less per year.
The legislature then reached an agreement on the proposed changes and sent the bill back to Baker last week for his signature.
The new law will apply the 5.7 percent hotel room tax to short term rentals, with an exemption for those who rent out their rooms for 14 days or less. Cities and towns can choose to add an additional 6 percent local excise tax (6.5 percent in Boston) and a 3 percent community impact fee, with an additional 2.75 percent fee levied in Cape Cod.
Additionally, the law requires short-term rentals to be registered with the state. The law also requires people who rent out their rooms to obtain $1 million in liability insurance.
The law, as per Baker's request, exempts those who rent out their units for 14 days or less from being required to register with the state or obtain the $1 million in insurance.
Beyond the laws at the state level, cities and towns will also be permitted to place their own restrictions on short-term rentals. The city of Boston has already done this, with a set of short-term rental laws that are due to go into effect on Tuesday.
Those laws, which are designed to limit the growing number of short-term rentals in the city by restricting who can list their house or apartment on a short-term rental site, drew the ire of Airbnb.
The company sued Boston, claiming that the city’s laws violate the Constitution, multiple federal laws, and Massachusetts state law and threaten short-term rental sites with “draconian” punishments should they violate the city’s rules.
Regardless of what happens in the Boston case, the state-level laws are now in effect.
“Our administration has long supported leveling the playing field for short term rental operators who use their properties as de facto hotels, and I appreciate the Legislature’s work to reach a compromise on this bill that adopts our proposal to avoid placing undue burdens on occasional renters,” Baker said in a statement provided to HousingWire.
As for Airbnb, the company said that it is “deeply disappointed” in the state’s new laws.
“We’re proud of the community we’ve built in Massachusetts, with over 1.2 million travelers using Airbnb to visit the Commonwealth and nearly 2 million Bay Staters using Airbnb to travel at home and abroad in 2018 alone,” Airbnb said in a statement provided to HousingWire. “While we are deeply disappointed in the flawed bill that emerged from Beacon Hill during the lame duck session, we will continue the fight to protect our community and the economic engine of short-term rentals for hosts, guests, and local small businesses.”