We’ve recently seen renewed interest in expanding the lodging tax to apply to private home rentals in Massachusetts, in part because of the increasing number of AirBnB units in the cities. The nearly 12% tax (5.7% to the state and up to 6% to the individual towns) would apply to all short-term rentals, as well as to small bed and breakfasts.
Some lawmakers are concerned that big investors are buying up buildings and renting them out as short-term rental units, thus removing them from the potential inventory of affordable housing.
Even though most of the homes on the Cape and Islands don’t fit this profile, the tax would apply to our homes as well as to the apartments and rented rooms in cities and towns. We would all be considered the same and taxed the same.
Once again, we ask that you contact your state legislators and ask them to consider the potential unintended consequences of this tax. Here are a few points that we believe they should consider before putting this tax through:
- The average annual rent increase for vacation homes is 2%. A nearly 12% increase in rent is unrealistic and would force homeowners to absorb the tax
- Many second-homeowners are already strapped to keep their residences here, and, even now, their rent doesn’t cover their expenses
- Proponents of the tax believe that vacationers should pay to use town services. But property owners already pay real estate taxes, and visitors often pay the towns for such amenities as beach stickers and permits.
- Many vacation rental homes are vacant for a majority of the year, so they do not utilize big budget items such as schools.
- Rental-home owners already pay a lot more in tax per bedroom to the town than a hotel/motel. Homeowners pay based on property values, while hotel/motels pay based on net income, which is much lower.
What are your thoughts on the lodging tax as it applies to private home rentals? Do you have any recommendations to help fight the proposed tax?