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Short-term rentals may face tougher rules in Massachusetts

April 4, 2018

BOSTON (AP) — The Massachusetts Senate has approved legislation regulating short-term rentals like those made through online platforms like Airbnb.

The Senate passed the bill Wednesday on a 31-6 vote. It would impose existing state hotel taxes on short-term rentals and allow communities to impose additional local excise taxes if they want. The state hotel tax is 5.7 percent.

The Senate bill differs from legislation approved last month by the Massachusetts House.

The House opted for a tiered system that would impose a 4 percent state tax on rentals by individuals who offer no more than two rooms for rent. Short-term rentals made through a professional property manager or investor host would be taxed at 5.7 percent and 8 percent, respectively.

The Senate says their version of the bill would generate about $34.5 million in state taxes and $25.5 million in local taxes annually.

The Massachusetts Lodging Association, which represents the hotels and motel industry, said the Senate bill capitulated to Airbnb.

Airbnb applauded the Senate bill.

During the debate, senators approved an amendment that added anti-discrimination language to the bill. They also approved a data-sharing amendment that would give communities access to information like the total number of days a house or apartment is being rented and the location of each short-term rental.

Sen. Eric Lesser of Longmeadow said the bill strives to balance the opportunities offered by new online platforms against the disruption the industry can cause. He said it’s important hotels and traditional bed and breakfast businesses aren’t put at a disadvantage while also recognizing many families use online platforms to put extra money in their pockets.

“It’s important to recognize this is an entirely new industry,” the Democrat said. “This bill levels that playing field. Everyone is treated the same, everyone pays the same taxes.”

The debate over services like Airbnb — assailed by critics for essentially turning apartments into hotel rooms, putting upward pressure on housing costs and driving out longer-term tenants who can’t afford rising rents — has raged for years.

It’s keenly felt in college towns, particularly ones that also are tourist destinations or are near them, like Boston and Cambridge, where critics say property owners can make more money renting out apartments or homes by the night instead of yearlong leases.

Massachusetts Lodging Association President Paul Sacco criticized the Senate for “failing to produce even the most basic of health, safety and consumer protections while continuing to allow wealthy investors to convert scarce housing stock into de facto hotels in residential neighborhoods.”

“Even the taxation portion of their bill gives unique rights to Airbnb that no other company in the state is entitled to — taxation without verification,” Sacco added.

Airbnb said it welcomed the bill and that it would allow the company to “collect and remit taxes on behalf of our Massachusetts hosts.

“We look forward to sharing the feedback and concerns of our community with the lawmakers,” the company said in a statement following Wednesday’s vote.

The travel website Expedia said the Senate bill “unfairly targets online travel agents.”

The House and Senate must now hammer out a single, compromise version of the bill.

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