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Massachusetts On Brink Of Imposing Hotel Tax On Short-Term Rentals

The Massachusetts State House

Lawmakers in Massachusetts compromised Sunday on a measure that would extend the state’s hotel tax to short-term rental units offered on websites like Airbnb

The deal struck by the House and Senate on Sunday could raise as much as $25M in tax revenue for Massachusetts by imposing the 5.7% state hotel tax on short-term rentals. Cities and towns would have the option to add an additional 6% tax, just as they do with hotels. Boston’s would be up to an additional 6.5%, the Boston Globe reports

Communities also have the option of enforcing an additional 3% tax on individuals with multiple units. Those opting to add this additional surcharge would have to spend 35% of the revenue on transportation infrastructure and affordable housing. An additional 2.75% tax levied on short-term rentals on the Cape and Islands would go toward a wastewater treatment fund. 

A tax of the same rate imposed on units in Boston, Cambridge, Worcester, Chicopee, Springfield and West Springfield would go to the Massachusetts Convention Center Authority, just as it does for hotels in those municipalities. 

The House and Senate are expected to vote on the bill Monday and send it to Gov. Charlie Baker, who hasn’t commented on the measure but has previously supported short-term rental regulation exemptions for homeowners who rent their units for less than 150 days in a year. 

The progress comes one day before the close of formal sessions this year for the Massachusetts legislature. Should Baker wait to veto or send the bill back to the legislative body with an amendment, the Massachusetts General Court would have to wait until 2019 to make changes or override the veto.

The move also calls for a registry of short-term rentals. While this database would not include the names of homeowners, a public version is part of recent regulation passed in Boston. Massachusetts’ largest city recently passed its own guidelines on short-term rentals, including a ban on renting out units the owner doesn’t actually live in.

While it is unclear what Baker will do with the state bill, one group that sparred with Airbnb during the Boston regulation debate is pleased with the compromise at the State House. 

“The conference committee did an outstanding job of producing a plan that is quite fair to all concerned,” Massachusetts Lodging Association President and CEO Paul Sacco said in a prepared statement to Bisnow. “It goes a long way toward leveling the playing field for all lodging businesses while maintaining a welcoming environment for new home-sharing platforms. After several years working to find the right balance, we urge the legislature to pass, and the governor to sign, this important bill.”