As you may already know, a new tax went into effect on January 1, 2019 that affected almost any lease signed on or after that date for a rental term commencing July 1, 2019 or later. Luckily, the tax was not retroactive, but it did come as a bit of a surprise for many, including real estate firms and homeowners alike.
We want you to know that we are here for you at Fisher Real Estate. While we are unable to register for you directly, our highly qualified team is prepared to walk you through the process, answer any questions we can, or help guide you to the proper source of the answer if we can’t.
As the Massachusetts Department of Revenue has finally unveiled the ability for operators (homeowners) and intermediaries to register utilizing the Mass Tax Connect portal, it is time to register your property and yourself as a homeowner. We are pleased to report that we have already completed our registration as an intermediary and when we did run into an issue, we were immediately connected to a live person to assist us with absolutely no hold time as they have ramped up staffing specifically dedicated to this new tax and registration.
We hope you will find it helpful that we have collected a few frequently asked questions and answers below to help guide you through this new process!
Is this a brand-new law?
Not exactly. Since there was already a hotel and motel tax, this law simply expanded upon that to include rentals of homes and condos.
When did it go into effect?
The tax went into effect on January 1, 2019. Anyone entering a lease on or after this date for a rental commencing July 1, 2019, or later must include this tax.
Is the tax retroactive?
Thankfully, no. If a lease was executed prior to January 1, 2019, it would not be affected by the new tax. Cheers to planning early on!
Are there any exceptions or exemptions?
Yes, there are! As a homeowner, if you rent your home for 14 days or less per calendar year, the taxes do not apply to the leases you execute. However, you are still required to register your home and provide the required insurance. The state defines a short-term rental as any rental period of 31 days or less which means that leases 32 days and longer are exempt from the tax, as well.
Specifically, this year, due to timing and organization of the law, leases commencing prior to July 1, 2019 were exceptions and tax did not apply. This exception will not apply to future years.
What is the insurance requirement?
Every homeowner (often referred to by MA DOR as the “operator” must carry not less than $1 million of liability insurance coverage for each stay. Please check with your insurance company to ensure you are already carrying such coverage or to discuss a new policy.
So, what’s next?
The most important thing to do now is log in to Mass Tax Connect at https://mtc.dor.state.ma.us/mtc/_/ and register your property. Once you have done this you will receive a “Certificate Number”. If you have your property listed with us here at Fisher (and we hope you do), you will need to get us that number as soon as possible. This number is what we will utilize to pay the state and local taxes on your behalf. The state has offered a grace period to homeowners of November 1, 2019 to register and receive this certificate number, but the sooner the better! Once we make our first payment in August, we will use your certificate number (or your social security number/tax identification number if we have yet to receive it) to submit payment as your intermediary if we had an applicable lease with you. Even if we do not have an applicable lease for 2019 with you, it is important you provide us with your certificate number if you hope to do business with us in the future.
If you do not use Fisher to rent your property, we are still happy to do our best to answer any questions you may have as we all make our way through this brand new process.
Helpful Massachusetts Short-Term Rental Tax Resources
• Massachusetts Department of Revenue FAQ’s
• Massachusetts Department of Revenue Contact Monday through Friday 8:30am-4:30pm
1-800-392-6089 (follow prompt 4 for short-term rental tax, and then prompt 2 for Mass Tax Connect web issues)