Short-term housing units rented through websites like Airbnb could be taxed at almost 17.5 percent in cities like Boston and Massachusetts would become the first state in the country to maintain a central registry under compromise legislation agreed to Sunday night by House and Senate negotiators.
State officials have been trying for years to figure out how to regulate the short-term rental market that exploded with the popularity of websites like Airbnb and created competition for hotels that felt like they weren’t on an even competitive playing field.
Housing advocates have also worried about the impact the short-term rental boom has had on neighborhoods, particularly in urban settings, where units have been turned into investment properties, crowding out residents looking for affordable options.
The six-member conference committee led by Rep. Aaron Michlewitz and Sen. Michael Rodrigues has been negotiating since early April, and finally reached compromise Sunday with just two days left for formal legislative sessions.
Under the conference report filed, short-term rentals would be subject to the same 5.7 percent lodging tax applied to hotel and motel room rentals. Cities and towns would have the option to levy an additional 6 percent tax on all short-term rental units, or up to 8 percent if the owner controls two or more units in the same municipality.
On Cape Cod and the islands, short-term units would also be taxed an additional 2.75 percent to help deal with Barnstable County’s wastewater issues. And in Boston, Cambridge, Worcester, Springfield, West Springfield and Chicopee, the 2.75 percent tax currently assessed on all hotel rooms to fund the Boston Convention and Exhibition Center would also be applied to short-term rentals.
The House is expected to vote first on the compromise bill Monday, when the Senate will also be in session on the second to last day for major business to get done for the year.
The new taxes proposed in the bill would take effect in January 2019 for all units booked after the first of the year. Michlewitz, a North End Democrat, said lawmakers conservatively anticipate the taxes will generate $25 million in state and $25 million in local revenue.
Should a city or town choose to levy the additional local option taxes on rentals, 35 percent of the money raised would have to go toward affordable housing or local infrastructure, under the bill.
The bill does not stop municipalities from banning short-term rentals within their jurisdiction or putting restrictions on the units. If cities and towns do vote to apply a local option tax, they would have the option of exempting owner-occupied units, meaning people who rent out a room in their home while they are also living there.
