Massachusetts Short-Term Rental Sales Tax

Starting July 1, 2019, any property which is rented for more than 14 days in a calendar year and for more than $15 per day is subject to a Room Occupancy Excise. This excise applies to all short-term rental contracts created on or after January 1, 2019.

A “short-term rental property” is defined as any occupied property where at least one (1) room or unit is rented though advanced reservations (such as Airbnb), for a period of less than 31 consecutive days per rental period.

Examples:

• An Airbnb reservation made on December 31, 2018 for a week in July 2019 is NOT taxed.
• An Airbnb reservation made on January 1, 2019 for a week in February 2019 is NOT taxed.
• An Airbnb reservation made on January 1, 2019 for a week in July 2019 must pay tax.

You must register your short-term rental(s) with MassTaxConnect!

Your short-term rental property must be registered with the State of Massachusetts’s Department of Revenue website, MassTaxConnect (MTC), regardless of the number of days per year you rent your property. However, if you rent your property for 14 days or less per year, you are exempt from the tax, and can indicate this in MTC when you register your property.

How to add your property to MTC:

• If you operate your short-term rental as an individual, you can log into MassTaxConnect, select “add account type/new location,” and select “room occupancy consolidated.”
• If you operate your short-term rental as an entity (a partnership, trust, LLC, etc), you will need to register with MTC as an operator if you have not already. Once you are logged in as a business, select “add account type/new location,” and select “room occupancy consolidated.”

What gets taxed?

Any rent collected for a short-term rental is subject to this tax. “Rent” is defined as all amounts collected in exchange for occupancy, including optional charges such as insurance, cleaning fees, and booking fees. Refundable security deposits are excluded.

How much is the tax?

• State excise: 5.7%
• For properties in Boston, Worcester, Cambridge, Springfield, West Springfield, and Chicopee, there is an additional Convention Center Finance fee of 2.75%
• There may be additional local taxes, community impact fees, and Cape Code and Island Water Protection Fund taxes. See the Division of Local Service’s Municipal Databank for location-specific information.

When and how to pay the tax:

Room occupancy returns and taxes are due on the 20^th of the month immediately following the month in which rentals took place. For example, if you rented a room from September 15^th to September 22^nd, you must file a return on or before October 20^th.

You can submit returns and payments on a per-property basis, or you can consolidate multiple properties using an Excel template you can download from MTC.

For more information:

• Massachusetts Room Occupancy Frequently Asked Questions.
• Massachusetts Room Occupancy Excise Tax details.
• Full text of the law.