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New Rules — And Taxes — On Short-Term Rentals Go Into Effect In Mass.

Airbnb website. (Jesse Costa/WBUR)
Airbnb website. (Jesse Costa/WBUR)

You might have to pay a little bit more for a short-term housing rental in Massachusetts.

A new state law that taxes rentals done through websites like Airbnb goes into effect Monday.

The law applies a 5.7% tax to short-term housing rentals — the same lodging tax hotels already have. The law also gives cities and towns the ability to tack on more taxes to these rentals. Boston already implemented its own rules on short-term rentals at the start of the year.

Those fees will likely be passed on to renters, says Wendy Northcross, the CEO of the Cape Cod Chamber of Commerce. But, she says, the change likely won't slow down rentals.

"We believe that we're still very much within a sweet spot in terms of the occupancy tax rate — it's not very high comparatively to other states — and that the consumer will not be dissuaded from renting their vacation home because of that," Northcross said.

Some homeowners on the Cape have raised concerns about the taxes, but many say their customer base is strong, Northcross added.

There's also plenty of short-term rentals on the Cape. Between 2010-2015 the Cape lost 3,000 year-round home rentals and gained 5,000 seasonal home rentals, Northcross said.

Under the law, rentals on the Cape are also subject to a 2.75% tax that will go into a water protection fund, which will go towards projects to improve the water quality in the area.

The new law will create a statewide registry for all short-term rentals. The regulation also requires operators to have insurance.

It's still too early to tell what the impact of the new state law will be on short-term housing rentals. So far on the Cape rentals are off to a slow start, but that's more likely due to the rainy weather this spring, Northcross said.

READ MORE about the new state law.

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Zeninjor Enwemeka Twitter Reporter
Zeninjor Enwemeka is a reporter who covers business, tech and culture as part of WBUR's Bostonomix team, which focuses on the innovation economy.

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