Massachusetts Short-Term Rental Regulation: A Guide For Airbnb Hosts

Starting a Short-Term Rental Business in Massachusetts

Before launching a short-term rental business in Massachusetts, it's crucial to understand the regulations and zoning laws that govern this industry. Massachusetts has statewide regulations, but many cities and towns have their own additional rules.

In Boston, short-term rentals are only allowed in owner-occupied properties, meaning the owner must live in the unit for at least 9 months out of the year. Owners must register their rental with the city and pay a $200 fee. Cambridge has even stricter rules - rentals are limited to 14 days per year when the owner is not present.

Other towns like Brookline, Lynnfield, and Salem have banned short-term rentals in single-family homes that aren't owner-occupied. Many cities also restrict short-term rentals in leased apartments.

Before starting a short-term rental business in Massachusetts, be sure to:

• Research the specific regulations in your city/town
• Register with the state Short-Term Rental Registry
• Obtain any necessary local permits
• Understand lodging tax requirements
• Ensure your property is up to code with proper safety equipment

With careful planning and due diligence, short-term rentals can be a profitable venture in Massachusetts. Just be sure to dot your i's and cross your t's when it comes to local regulations.

Short-Term Rental Licensing Requirement in Massachusetts

To legally operate a short-term rental in Massachusetts, property owners must follow a set of state-wide requirements. The registration process involves submitting an application to the Massachusetts Short-Term Rental Registry along with several supporting documents.

The required documents and information include:

1. Proof of Liability Insurance: Short-term rental operators must maintain a minimum of $1,000,000 in liability insurance coverage, unless the rental is offered through a platform like Airbnb that provides equal or greater coverage.
2. City/Town Certification: A certificate from your city or town confirming the unit is eligible to be used as a short-term rental under local zoning laws and ordinances.
3. Proof of Primary Residence: For units classified as "Home Share" rentals, documentation showing the unit is the operator's primary residence, such as a driver's license or utility bill.
4. Floor Plan: A floor plan of the rental unit showing the location of smoke and carbon monoxide detectors, fire extinguishers, and emergency exits.
5. Good Standing Certificate: A certificate of good standing from the Massachusetts Department of Revenue, proving the operator has no outstanding tax obligations.

The application can be submitted online through the Massachusetts Short-Term Rental Registry portal. There is a $50 registration fee, and the process typically takes 1-2 weeks for approval.

Once approved, operators will receive a certificate of registration which must be prominently displayed inside the rental unit. This registration must be renewed annually.

Operators who fail to register their short-term rental may face penalties of $100 per violation, up to a maximum of $1,000 per year. The state may also issue cease and desist orders for unregistered rentals.

In addition to state registration, many cities and towns in Massachusetts have their own local licensing requirements for short-term rentals. For example:

1. In Boston, operators must obtain a Short-Term Rental License from the city's Inspectional Services Department. The license costs $200 and is valid for one year.
2. Cambridge has even stricter rules, allowing short-term rentals only in owner-occupied single-family homes for a maximum of 14 days per year when the owner is not present.
3. Brookline, Lynnfield and Salem have banned short-term rentals entirely in single-family homes that are not owner-occupied.

It's crucial for operators to research and comply with the specific regulations in their city or town, in addition to state registration requirements. Failing to obtain proper local licenses can result in significant fines - up to $300 per day in Boston for example.

Required Documents for Massachusetts Short-Term Rentals

To legally operate a short-term rental in Massachusetts, property owners must submit several documents to the state's Short-Term Rental Registry. Each document serves a specific purpose in ensuring the rental complies with state regulations. The required documents include:

1. Proof of Liability Insurance: Short-term rental operators must provide evidence of liability insurance coverage of at least $1,000,000, unless the rental is offered through a hosting platform like Airbnb that provides equal or greater coverage. This protects both the host and guests in case of accidents or injuries on the property.
2. City/Town Certification: A certificate from the city or town where the rental is located, confirming the unit is eligible to be used as a short-term rental under local zoning laws and ordinances. This document ensures the rental complies with any additional regulations set by the local municipality. Contact your city/town's building or zoning department to obtain this certification.
3. Proof of Primary Residence: For units classified as "Home Share" rentals, hosts must provide documentation showing the unit is their primary residence, such as a driver's license, voter registration, or utility bill. This requirement aims to prevent investors from buying up housing stock solely for short-term rentals, which can negatively impact local communities.
4. Floor Plan: A detailed floor plan of the rental unit showing the location of safety features like smoke detectors, carbon monoxide detectors, fire extinguishers, and emergency exits. This helps ensure the unit meets all necessary safety standards. You can create this floor plan yourself or hire a professional.
5. Good Standing Certificate: A certificate of good standing from the Massachusetts Department of Revenue, proving the operator has no outstanding tax obligations. Apply for this certificate online through the DOR's MassTaxConnect portal.

In addition to these state-required documents, many cities and towns in Massachusetts have their own additional licensing requirements. For example:

1. Boston requires a Short-Term Rental License from the city's Inspectional Services Department, along with proof of residential exemption like a deed or property tax bill.
2. Revere mandates an annual $50 inspection fee and $150 registration fee, plus documentation like a state certificate of short-term rental and a valid insurance binder with liability limits of at least $250,000 per incident.
3. Amesbury charges a $200 annual licensing fee and may require additional licenses and fees determined on a case-by-case basis.

Be sure to check with your specific city or town for any supplementary documentation needed for local licensing. Submit all required documents to the Massachusetts Short-Term Rental Registry online portal, along with the $50 state registration fee.

Massachusetts Short-Term Rental Taxes

When operating a short-term rental business in Massachusetts, several types of taxes apply. It's crucial for hosts to understand their tax obligations to remain compliant with state and local laws. The primary taxes that short-term rental operators must collect and remit include:

1. State Room Occupancy Excise Tax: Massachusetts imposes a statewide room occupancy excise tax of 5.7% on the total amount of rent for short-term rentals (31 days or less). This tax applies to all types of short-term accommodations, including hotels, motels, bed and breakfasts, and vacation rentals.
2. Local Room Occupancy Excise Tax: In addition to the state tax, cities and towns in Massachusetts may charge a local room occupancy excise tax of up to 6% (6.5% for Boston). For example, Provincetown has a local room occupancy tax of 6%.
3. Convention Center Financing Fee: In certain cities like Boston, Worcester, Cambridge, Springfield, West Springfield, and Chicopee, an additional 2.75% tax is charged to fund convention centers.
4. Cape Cod and Islands Water Protection Fund Tax: Municipalities in Barnstable, Nantucket, and Dukes Counties may charge an extra 2.75% tax to support the Cape Cod and Islands Water Protection Fund. As of July 1, 2019, this applies to all Barnstable County municipalities.
5. Community Impact Fee: Beginning July 1, 2019, cities and towns that have adopted a local excise tax may vote to charge an additional community impact fee of up to 3% on professionally-managed short-term rental units. This fee applies to properties with two or more rental units in the same city/town under the same operator, and the property is not the operator's primary residence.

To illustrate, the total tax on short-term rentals in Provincetown is 17.45%, which includes the 5.7% state tax, 6% local tax, 2.75% Cape Cod and Islands Water Protection Fund Tax, and a 3% community impact fee for professionally-managed units.

Tax Deductions and Write-Offs

Short-term rental hosts can claim various tax deductions to offset their rental income and reduce their taxable income. Some common deductions include:

1. Depreciation: Hosts can deduct the cost of the rental property and any improvements over the property's useful life (27.5 years for residential properties).
2. Mortgage Interest: Interest paid on a mortgage for the rental property is fully deductible.
3. Property Taxes: Real estate taxes paid on the rental property are deductible.
4. Cleaning and Supplies: Expenses related to cleaning the rental unit between guests, such as cleaning services, laundry, and supplies, are deductible.
5. Repairs and Maintenance: Costs incurred for maintaining and repairing the rental property are deductible.
6. Insurance Premiums: Premiums paid for short-term rental insurance can be deducted.
7. Utilities: Expenses for utilities like electricity, gas, water, and internet are deductible if they are not paid by the guests.
8. Advertising and Promotion: Costs associated with marketing the rental property, such as online listings, photography, and signage, are deductible.

It's important to note that if a host uses the rental property for personal purposes for more than 14 days or 10% of the total rental days (whichever is greater), they must allocate expenses between personal and rental use.

To maximize tax deductions and ensure compliance, short-term rental hosts should maintain accurate records of all income and expenses and consult with a tax professional familiar with the specific requirements in their area.

Does Massachusetts Strictly Enforce STR Rules?

Massachusetts has implemented a comprehensive set of regulations for short-term rentals, but the question remains: does the state strictly enforce these rules? Compared to other states in the region, Massachusetts takes a more stringent approach to enforcement. While some hosts may choose to operate their short-term rentals despite the regulations, the potential consequences of non-compliance are significant.

According to discussions on platforms like Reddit and Bigger Pockets, many hosts express frustration with the enforcement process and the penalties for violating the rules. For example, one host on the Bigger Pockets forum shared their experience:

"I own a two-family in Somerville and was renting out the upstairs unit on Airbnb. I received a cease and desist letter from the city because I wasn't living in the property myself. The fines for non-compliance are steep - up to $300 per day. It's just not worth the risk."

Another host on the Boston subreddit wrote:

"The rules in Boston are incredibly strict. You can only rent out your primary residence, and even then, there's a limit of 90 days per year if you're not present during the rental. The city is actively enforcing these rules and cracking down on violators. I know several hosts who have been fined or had their rental registration revoked."

These anecdotes suggest that Massachusetts, and particularly cities like Boston and Somerville, are not particularly "Airbnb friendly" compared to other markets. The state has made a concerted effort to regulate the short-term rental industry and protect housing stock for long-term residents.

While some hosts may still choose to operate under the radar, the risks are high. In addition to substantial daily fines, non-compliant hosts may face legal action, difficulty obtaining insurance coverage, and increased liability exposure.

The consensus among hosts on forums like Bigger Pockets and Reddit is that operating a short-term rental in Massachusetts without adhering to the rules is a risky proposition. The potential consequences far outweigh any short-term gains, and hosts who prioritize compliance and operate responsibly are better positioned for long-term success in this market.

In summary, Massachusetts strictly enforces its short-term rental regulations, particularly in cities like Boston that have implemented even more stringent local rules. While some hosts may attempt to skirt the law, the state is not generally considered "Airbnb friendly," and the risks of non-compliance are significant. Hosts who want to succeed in this market should make every effort to understand and adhere to all applicable regulations at both the state and local level.

How to Start a Short-Term Rental Business in Massachusetts

Starting a short-term rental business in Massachusetts requires careful planning and attention to detail. Follow these steps to launch your rental business on a solid foundation:

1. Research local regulations: Before investing in a property or listing your space, thoroughly research the short-term rental regulations in your city or town. Massachusetts has statewide rules, but many municipalities have additional restrictions. For example, in Boston, you can only rent out your primary residence, and there's a 90-day limit if you're not present during the rental.
2. Choose a property: If you don't already own a suitable rental property, consider factors like location, size, amenities, and local demand when making a purchase. Properties near popular tourist destinations, universities, or business districts tend to have higher occupancy rates. Keep in mind that some cities, like Cambridge, only allow short-term rentals in owner-occupied single-family homes.
3. Register with the state: All short-term rental operators in Massachusetts must register with the state's Short-Term Rental Registry. The registration process involves submitting an application, proof of liability insurance, a city/town certification, a floor plan, and other supporting documents. The registration fee is $50, and you must renew your registration annually.
4. Obtain local licenses: In addition to state registration, many cities and towns require short-term rental operators to obtain a local license. For example, in Boston, you'll need to apply for a Short-Term Rental License from the city's Inspectional Services Department. Be sure to research and comply with all local licensing requirements.
5. Set up your rental space: Furnish and decorate your rental space to create a welcoming and comfortable environment for guests. Invest in quality furniture, linens, and amenities that will appeal to your target market. Consider hiring a professional photographer to showcase your space in its best light.
6. Create a listing: Choose a platform like Airbnb, VRBO, or Booking.com to list your rental property. Craft a compelling listing title and description that highlights your space's unique features and benefits. Be transparent about your rental's location, amenities, and any house rules or restrictions.
7. Establish pricing and policies: Research comparable rentals in your area to determine a competitive nightly rate. Consider factors like seasonality, events, and demand when setting prices. Develop clear policies around booking, cancellations, check-in/check-out, and guest behavior. Communicate these policies upfront to set expectations and minimize potential issues.
8. Manage bookings and guest communication: Once your listing is live, be responsive to guest inquiries and booking requests. Communicate clearly and promptly to build trust and ensure a smooth rental experience. Consider using a property management software or hiring a professional property manager to streamline operations.
9. Comply with tax obligations: Short-term rental operators in Massachusetts must collect and remit state and local room occupancy taxes, which can total upwards of 17% in some cities. Familiarize yourself with the tax rates in your area and set up a system for collecting and remitting taxes on a regular basis.
10. Maintain and improve your rental: Regularly clean and maintain your rental property to ensure a high standard of quality for guests. Respond promptly to any maintenance issues or guest concerns. Continuously gather feedback and make improvements to enhance the guest experience and attract positive reviews.

By following these steps and staying informed about local regulations, you can build a successful and compliant short-term rental business in Massachusetts. Remember to prioritize guest satisfaction, maintain accurate records, and seek professional advice when needed to navigate this dynamic and rewarding industry.

Who to Contact in Massachusetts about Short-Term Rental Regulations and Zoning?

If you have questions about short-term rental regulations and zoning in Massachusetts, there are several resources available to help you navigate the process:

Massachusetts Department of Revenue: The DOR administers the statewide short-term rental tax and registration requirements. You can contact them with questions about registering your rental, collecting taxes, and filing returns.

1. Phone: (617) 887-6400
2. Email: RoomOccupancyExcise@dor.state.ma.us
3. Website: https://www.mass.gov/orgs/massachusetts-department-of-revenue

Local Building/Zoning Department: Each city and town in Massachusetts has its own zoning laws and regulations that may impact short-term rentals. Contact your local building or zoning department to inquire about any additional requirements or restrictions in your area. For example:

• Boston Inspectional Services Department: (617) 635-5300, https://www.boston.gov/departments/inspectional-services
• Cambridge Inspectional Services Department: (617) 349-6100, https://www.cambridgema.gov/inspection
• Somerville Inspectional Services Division: (617) 625-6600 ext. 5600, https://www.somervillema.gov/departments/inspectional-services

Massachusetts Association of Realtors (MAR): The MAR has a wealth of information and resources for property owners, including guidance on short-term rental regulations. They also offer educational workshops and networking events for landlords and investors.

• Phone: (781) 890-3700
• Email: info@marealtor.com
• Website: https://www.marealtor.com/

MassLandlords: This statewide landlord association provides education, resources, and advocacy for rental property owners in Massachusetts. They have a dedicated page on their website about short-term rental laws and regulations.

• Phone: (774) 314-1896
• Email: hello@masslandlords.net
• Website: https://masslandlords.net/laws/airbnb-massachusetts/

In addition to these official resources, there are several online communities where Massachusetts short-term rental hosts share information and advice:

• Airbnb Host Community - Massachusetts: This Facebook group has over 2,000 members and is a platform for hosts to ask questions, share experiences, and stay up-to-date on local regulations. https://www.facebook.com/groups/1110131179024504/
• Boston Airbnb Hosts: Another active Facebook group specifically for hosts in the Boston area, with over 1,000 members. https://www.facebook.com/groups/bostonairbnbhosts/
• Massachusetts Real Estate Investors Association (MassREIA): While not exclusively focused on short-term rentals, the MassREIA forum is a valuable resource for connecting with other landlords and investors in the state. https://massreia.com/forums/
• BiggerPockets Boston: The BiggerPockets forums have a dedicated section for the Boston market, where investors discuss a range of topics, including short-term rentals. https://www.biggerpockets.com/forums/432-boston-ma

By leveraging these official contacts and community resources, you can stay informed about the evolving landscape of short-term rental regulations in Massachusetts and ensure your rental business remains compliant and successful.

What Do Airbnb Hosts in Massachusetts on Reddit and Bigger Pockets Think about Local Regulations?

Massachusetts Airbnb hosts have been actively discussing the state's short-term rental regulations on various online forums. Here are some real-life experiences and insights shared by hosts on platforms like Reddit and Bigger Pockets:

Reddit - r/AirBnB: In a thread titled "Massachusetts new short-term rental law," hosts discuss the implications of the state's regulations. One host points out an exemption for owner-occupied homes with three or fewer rooms to let, which seems to be less widely known. They also raise questions about insurance requirements and tax collection. Another host shares their experience with registering on the Massachusetts Department of Revenue website to allow Airbnb to remit taxes on their behalf.

Reddit - r/SalemMA: In a post on the Salem, MA subreddit, a prospective host asks for advice on starting an Airbnb in their in-law suite. A commenter working in the industry cautions that with the new Massachusetts regulations, it's becoming increasingly difficult to rent out in-law apartments through online platforms. They suggest that rentals would need to be over 10 days to comply with the rules.

Bigger Pockets Forum: On the Bigger Pockets Massachusetts subforum, a thread titled "New Massachusetts Short-Term Rental Registration" features hosts discussing the registration process and requirements. One host shares their experience:

"I just completed the registration process for my short-term rental in Boston. It was fairly straightforward - I had to provide proof of residency, get a business certificate from the city, and register with the state. The most time-consuming part was gathering all the necessary documents. Overall, it's an added hassle, but I understand the need for some regulation in this space."

These forum discussions highlight the diverse opinions and experiences of Airbnb hosts in Massachusetts as they navigate the state's evolving short-term rental landscape. While some appreciate the efforts to regulate the industry, others find the rules overly burdensome, particularly for small-scale operators. As the conversation continues, hosts are adapting to the new requirements while advocating for their interests and seeking clarity on the finer points of the regulations.

Disclaimer: While we here at BNBCalc strive to keep all of our regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each area and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.