If you are a property owner on Martha’s Vineyard and plan on renting your home as a short term vacation rental OR you are planning on renting a vacation home on Martha’s Vineyard this summer then you need to read this:
On Dec 28 2018, Governor Baker signed the new short term vacation rental law effective Jan 1, 2019 (yes, 1 business day to implement). Since then Tea Lane Associates, like many real estate companies, insurance companies, home owners and brokers have been scrambling to understand and comply with, the new laws for the busy 2019 summer rental season. At Tea Lane we have revised our lease, our software, and rental system. Our policies and procedures have been updated as an ongoing project, and our accounting is now set to accommodate the changes and make the transition as smooth as possible for you. In addition our brokers and agents are fully up to speed on the requirements and we are happy to answer any questions you have.
…and so without further adieu, we are ready to bring you (drum roll please) our comprehensive explanation of the new law:
Highlights of the new Short Term Rental Law, Massachusetts Chapter 337
Effective 1/1/19 for all leases commencing 7/1/19 forward – Click here to read the law
Tax Rates on all Rent and Fees
‘Rent’ is defined as the ‘total consideration paid by or on behalf of an occupant, including any service, cleaning or other charge.’ Refundable fees, such as security deposits, are not considered consideration and would not be taxed. However, any charges for services against the security deposit will be taxed. If the charge is for outside of consideration of rent, i.e. Steamship Authority tickets, that too would not be considered part of consideration for the stay and not taxed.
Current Tax Rates*:
Aquinnah Town 4% + Mass State 5.7% = 9.7%
Chilmark Town 4% + Mass State 5.7% = 9.7%
Edgartown Town 4% + Mass State 5.7% = 9.7%
Oak Bluffs Town 6% + Mass State 5.7% = 11.7%
Tisbury Town 6% + Mass State 5.7% = 11.7%
West Tisbury Town 6% + Mass State 5.7% = 11.7% (updated summer 2019)
(*The short-term rental tax in Massachusetts may vary based on local ordinances, bylaws, as well as LESSOR’s property holdings. The Premises is currently subject to the tax rates stated in the payment schedule on page 1. These tax rates are subject to change and will be finalized at the time occupancy transfers).
Please note that any town may change their local tax rate (from 0-6%) at a future town meeting.
Dukes County is not subject to the Cape & Islands Water Protection Plan of 2.75% HOWEVER, towns may opt-in in the future.
Community Impact Fee of 3% This is an optional tax a town can add via their legislative body for those who own multiple properties; to date, no town has adopted this tax on the Island. HOWEVER, towns may opt-in in the future.
The taxes are owed by the homeowner, but don’t worry, Tea Lane Associates, via written agreement of our lease, will collect and pay them on the leases we write.
There are a few exceptions to the Tax :
- If lease period is for over 31 days
- If rented for only 14 days a year or less; owner must file declaration.
- Exemptions do not apply to the insurance and registration portion of the law.
Insurance for Homeowners: (but please read the following info “for tenants” also as if affects you too!)
Owner must provide $1,000,000 liability insurance for protection in respect of the damages arising out of vacation rental activity for which the owner becomes legally liable to third parties. TLA require a disclosure form from our rental property owners
Insurance for Tenants: (homeowners please also read this!)
Because TLA cannot monitor every home we list as a rental or guarantee that a home owner’s liability protection covers $1,000,000 at the time of our tenants’ lease. We have decided to impose a mandatory umbrella policy for all leases. We scoured the rental insurance market to find a cost effective policy that not only meets the requirement of Massachusetts State Law Chapter 337, it covers renters for accidental damages and for $6/day it provides coverage and peace of mind for tenants plus eliminating the need for a large security deposit. We explain it here:
- The cost is $6/day or $42/week. It will also provide up to $10,000 for repair or replacement cost protection against physical loss or damage to LESSOR’s real property contents when caused by a LESSEE, for losses up to $10,000. Minimum claim is $50.00. Tea Lane will contact the insurance carrier for any claims providing the damage is reported according to our rental policies and procedures.
- All of our leases created after 1/1/19 will include a fee and clause for this program.
- The fee is charged to the tenant and paid at final payment.
- Security deposits will no longer be held to cover physical loss or damage to LESSOR’S property by the LESSEE. A smaller deposit will be held to cover garbage removal and final cleaning (when there is no upfront cleaning fee or where this goes over that amount), interim cleaning costs (when not paid directly to cleaner by the LESSEE), and other incidentals such as - international phone calls, TV movie rental. Plus any violation of the lease conditions.
Certificate of Registration with the Department of Revenue. The Department of Revenue has issued a FAQ sheet here:
Massachusetts Registry of Short Term Rentals All owners will be required to register with the state, with a target completion date of September 30 2019. We do not have to wait for them to write leases. This will be addressed in subsequent Department of Revenue regulations. We will update this information as soon as we are aware of the process from the state.
Inspections and Additional Regulations
Cities and towns may implement a health and safety inspection requirement and set the frequency of inspections. Short-term rental operators are required to cover the cost of inspections and will likely face a fee to cover registration costs as well. This will be determined in the future on a town by town basis.
If you have any questions at all please contact us on 509 696 9999. Or email email@example.com
Some useful links:
Vineyard Gazette Article 28th December 2018
Mass Law Chapter 337
Boston Magazine Aritcle March 23rd 2018