The latest information on the new short-term rental law and recently released regulations.
On June 28, the Department of Revenue (DOR) released draft regulations on the new short-term rentals law. The regulations help clarify aspects of the law and respond to some of the concerns MAR raised through our advocacy. We will continue to work with DOR, advocating for further clarification and educating them on the effect the regulations will have on our members and the short-term rental industry. Here are some key observations from the draft regulations:
REALTOR® Responsibilities: Real estate licensees are called intermediaries under the law and regulations. If you collect or facilitate the collection of rent, you are required to:
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- Register with the Department of Revenue through MassTaxConnect.Video instructions are available here.
- Assess, collect, report and remit all taxes.
- Maintain records of any excises collected and remitted.
- Ensure that the short-term rental operator is registered with DOR by obtaining the operator’s registration certificate number issued by the DOR. Until November 1, 2019, if an intermediary is not able to obtain this number, they must instead use the operator’s federal employer ID number or SSN on all returns. As of November 1, 2019, all returns filed by intermediaries must include the operator’s registration certificate number.
- Notify the operator of its responsibility to comply with all applicable municipal, state, and federal laws. Notification may be made by hand, mail delivery, or through any electronic process, such as electronic message, mobile or smartphone application, digital media, or communications portal.
- Provide notice to the operator within a reasonable time that any excises due have been collected and remitted to DOR. The notice must include itemization of the date of each occupancy, the rent imposed (including booking fees), and all state and local taxes and fees collected and remitted to DOR on behalf of the operator.
Tax on Transfer of Occupancy: Occupancy is considered to “transfer” at the check-in time each day, much like hotel stays. This will only impact short-term rentals when local communities adopt or amend local taxes and fees. In this case, the new or amended tax rate must be charged on the date it is implemented as occupancy is deemed to have transferred that day at check-in time, regardless of whether the occupants arrive or depart. This Department is exempting from tax all short-term rentals that began before July 1, regardless of when the occupants turn over.
Defining Rent: Rent includes but is not limited to: payment for any service, cleaning or other charge, booking fees, and other service charges. Thanks to MAR’s advocacy, rent does not include:
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- Security deposits
- Optional, separately stated charges for services provided by another vendor not related to occupancy, such as airline tickets, a whale watch, ferry tickets, or trip insurance
Insurance: The draft regulations are silent on the required $1 million insurance policy required for all short-term rental operators. We are seeking additional information from DOR.
If you have any questions or concerns, please contact the MAR legal hotline at (800) 370-5342 or legalhotline@marealtor.com.