Massachusetts New Tax on AirBnB Has Some Grumbling

Residents of Boston and the rest of Massachusetts are unhappy with a new tax on Airbnb and other short-term rentals.

In a not-even-close vote, Massachusetts state legislators voted recently to impose taxes on short-term rentals. The measure which passed by a 117-30 margin would impose a new tax on Airbnb rentals and other similar situations.

Rentals will be taxed at levels ranging from 4-8%, depending on how many units a host offers.

  • Residential hosts renting two or fewer units would be taxed at 4%,
  • Investor hosts with three to five units would be taxed at 5.7%.
  • Professionally managed hosts renting six or more units would face an 8% tax.

“The elderly couple in the South End renting out their spare bedroom is a different type of business than a summer vacation rental on the Cape or a unit of housing that is on the short-term rental market for 365 days of the year,” said Rep Aaron Michlewitz,

While the bill did not face harsh opposition, it was not without its critics. There are fears that the tax will dissuade individuals from entering the sharing economy and using such services as Airbnb.

Supporters such as Representative Aaron Michlewitz argue that the new tax on AirBnB and similar platforms have “created a whole new industry that at the moment is completely unregulated, has created drastic inequities in the overall lodging market and has added to the housing crisis in some of our biggest cities.”

Airbnb Speaks Out

For now, the tax law does not seem to be in danger of going anywhere. For their part, AirBnB called the measure says the measure goes too far.

“This proposal is onerous and overly burdensome for our host community, and the kind of legislation the hotel industry has promoted across the country to prevent middle class families from earning additional income… The commonwealth and its residents can only truly benefit from fair and reasonable short term rental rules.”

It’s unlikely that the laws will change any time soon. However, it does serve as a warning to home owners who have been earning extra income through short-term rentals. The message is: ‘welcome to a new tax.”

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