Is Rental Arbitrage Legal in Massachusetts?
December 2018 legislation established occupancy tax and registration requirements. Public Registry of Lodging Operators maintained by Department of Revenue (43,400 registered STRs as of July 2024). Definition: transient occupancy not more than 30 days. Both owner-occupied and non-owner-occupied allowed, with different inspection schedules. Primarily owner-occupied lodging houses (1-family, 5 or fewer guest rooms, compensation provided) regulated separately.
Requirements
- Registration with Department of Revenue Public Registry of Lodging Operators. Occupancy tax compliance. Transient occupancy defined as not more than 30 days. Municipal inspections required: non-primarily owner-occupied annual inspections; primarily owner-occupied lodging houses inspected at least every 5 years; primarily owner-occupied non-lodging-house dwellings exempt from periodic inspections. Inspection fees set by municipality. Sprinkler systems required for newly constructed STR lodging houses and dwellings exceeding 14,400 sq ft.
Restrictions
- Each municipality sets inspection fees and standards. Non-primarily owner-occupied dwellings face annual inspections. Lodging houses limited to 5 or fewer guest rooms with permanent occupancy requirement. Dwellings exceeding 14,400 sq ft must have sprinkler systems. Primarily owner-occupied dwellings begun after October 17, 2017 must install sprinkler systems. Different inspection/compliance standards by ownership/occupancy type.
Taxes and Fees
- Occupancy tax required (specific rate varies and set by municipalities). State registration with Department of Revenue required.
Next Step
Legal is one half of the decision. The other half is whether the deal earns enough to be worth the risk.
Sources
Frequently Asked Questions
- Do Massachusetts Short-Term Rental Hosts Register With the State?
- Yes. Every operator registers with the Department of Revenue through MassTaxConnect before collecting rent.
- What Taxes Apply in Massachusetts?
- A 5.7% state room occupancy excise on stays of 31 days or less, plus local taxes of up to 6% (6.5% in Boston) and, where adopted, a community impact fee of up to 3%.