Martha’s Vineyard Vacation Rentals: New Short Term Rental Tax Questions And Answers

The cost of a Summer vacation rental on Martha’s Vineyard is about to take an automatic 10% to 15+% jump, thanks to a new short term rental tax. Beginning in 2019, the new vacation rental tax is slated to go into effect across Massachusetts, and it will be added onto all vacation rentals on Martha’s Vineyard.

However, the exact details, the exact amount(s), and the fine print are still up in the air, as Governor Baker and the state legislature are continuing negotiations to reach a compromise on the new tax.

While a lot is still up in the air, there are some things we do know about the new short term rental tax coming to Martha’s Vineyard, and we thought we’d outline those for both our Point B landlord clients and rental customers.

Short Term Vacation Rental Tax Q&A

1. What is considered a Short Term Vacation Rental? The tax would apply to rentals of 31 days or less.
2. Who pays the tax? The new tax will be paid by the rental customer. It becomes a line item fee on a lease, just like the sales or lodging tax would be on a hotel bill. The customer pays it, not the landlord.
3. Who collects the tax? If you rent your home thru Point B, we collect the tax as part of our lease process (which will include state, local, and possible regional taxes). We have a very sophisticated new property management system that automates the tax collection and processing for us. For landlords who also rent their home on their own, they will be responsible for collecting and reporting taxes for any of those leases separately.
4. When does the new tax begin? The current plan will put the new tax into effect for 2019. Leases for 2019, signed before November 1, 2018, would not be subject to the new tax, but all others after that date will be. Given the current delays in the final negotiations between the governor and the legislature, Ryan Castle, the CEO of the Cape and Islands Association of Realtors, told us yesterday, it is unclear if the November 1st timeline will stay in place or not. However, both sides agree they want the tax in place for 2019. It is always possible they won’t reach a compromise but it is expected. Suggestion: If you’re a rental customer, book now, before November 1st and avoid the extra 10 – 15+% tax.
5. How much will the new tax rate be? It will depend on the final decisions AND it will depend where the rental property is located on the Martha’s Vineyard. Here are some of the variables. The state rate is already set at 5.7%. Local towns can add up to 6%. And on the Cape and Islands, there is an additional 2.75% waste water tax. There is also a “community impact fee” of 3%, that towns could levy on homeowners, who own two or more short term rental properties. Some of the caveats. Towns have to opt-in for the waste water tax, and the 3% tax on owning two or more rental homes. There is reportedly some push back on these. It’s also not yet known, what tax rate each town on Martha’s Vineyard will set, but if we look at the current lodging/rooms tax (that hotels pay), Edgartown is 4%, Oak Bluffs and Vineyard Haven are 6%, and Chilmark is 4%. Final rates are still to be set.
6. $1 Million Liability Insurance Requirement. All short term vacation rental homeowners will be required to carry at least $1 million of liability coverage for each stay.
7. Required Registration With The State. There will be a required online state registry for all short term vacation rental homes. There is no statewide inspection requirement but towns may require licensing and/or inspections, and can set other rules for vacation rentals.

Right now, that’s all we know for sure. Ryan Castle, and our colleagues at the Cape Cod & Islands Association of REALTORS, have given us the OK to share a page from their website that is continually updated as there are new developments. Monitor the latest on the Short Term Rental Law here.

So, what’s the bottom line for Martha’s Vineyard rental customers, and landlord homeowners on Martha’s Vineyard?

Martha’s Vineyard Rental Customers

Bottom line: Next year, Martha’s Vineyard rental customers are going to see substantially higher overall rental costs, which could jump anywhere from 10% – 15+% more than this year. Take advantage of booking before the new tax rate applies to your 2019 vacation rental lease here on Martha’s Vineyard. Remember, the current cutoff is November 1, 2018.

If you’re one of our repeat rental customers, it’s a good time to re-book. If you’re new to the Vineyard, our Featured Listings are a great place to start if you’re looking for a Martha’s Vineyard vacation rental. And of course, you can search our entire Martha’s Vineyard rental inventory as well. Our Rental Team Agents are expert consultants for helping you navigate the vacation rental home market on Martha’s Vineyard. They’re available by phone, 508-627-4567 ext 1 or email.

Martha’s Vineyard Rental Homeowners

Bottom line: Given the looming short term vacation rental tax, the Point B Rental Team is recommending landlord clients hold off on any big rate increases for 2019. While the tax will not per se cost you anything, many rental customers on Martha’s Vineyard, are going to have some sticker shock next year.

Of course, eventually, it will all even out in the rental equation. Most other destinations already have similar taxes in place. But it’s that first year when the big jump comes, that causes the sticker shock.

We hope we’ve cleared the air (at least as much as we can at the moment) on the coming short term vacation rental tax on Martha’s Vineyard. Of course, we’re monitoring and tracking this carefully as well, and we’ll let you know once the final decisions and rates are in place.