<p>Martha’s Vineyard’s first summer with a tax on short-term rentals is in the books, and real estate brokers and listing agents are voicing frustration.
Martha’s Vineyard’s first summer with a tax on short-term rentals is in the books, and while towns are reporting strong seasons and busy traffic, real estate brokers, home renters and listing agents are voicing frustration about the effects of the new tax on an already pricey vacation market. Hard numbers are still unavailable, but anecdotal reports on revenue from summer rentals are mixed.
Elizabeth Weedon at WeNeedaVacation.com, a rental website for the Cape and Islands, reported a 3.9 per cent downturn in bookings overall this summer compared to 2018. Martha’s Vineyard saw only a one per cent drop, she said.
“As disappointed as we were that they were down at all, we feared they would be down more because of the rental tax,” Ms. Weedon said. “But that doesn’t mean we haven’t spent a lot of time talking people off a ledge. There have been many instances of lost bookings and having to eat the tax.”
Signed into law at the end of last year, the rental tax expands the 5.7 per cent state hotel and rooms tax to include short-term rentals. Island towns had the option of tacking on a local occupancy tax of up to six per cent. In Oak Bluffs, Tisbury and West Tisbury that translates to an 11.7 per cent tax on short-term rentals. In Edgartown, Chilmark and Aquinnah, the number is 9.7 per cent.
The law took effect July 1. A short-term rental is defined as any occupied property rented out for less than 31 days. Properties that are rented out for less than two weeks in a calendar year are exempt from the tax.
The first payments to the state were due August 20, and are due on the 20th day of every month after that. While the state Department of Revenue is responsible for returning the tax to the towns on a quarterly basis, landlords are responsible for collecting the money from tenants, and are required to register their properties online through MassTaxConnect. For many, that has proved a difficult logistical challenge.
“Realtors are really getting hurt by this situation,” Ms. Weedon said. “They are tasked with collecting the tax and remitting it to the state. A lot of these realtors on the Vineyard are small shops. They don’t have the personnel for that and it’s been very disruptive for them.”
Anne Mayhew of Sandpiper Realty agreed.
“It’s challenging. It’s challenging because I don’t think that the law was well-written and there could be different interpretations, and we had to sit back and see what the DOR was going to determine,” she said.
Sandpiper rents out between 700 and 800 properties on the Island, with a concentration in Edgartown. WeNeedaVacation lists more than 400 rental properties across the Vineyard.
With the new tax, Ms. Mayhew said the company had to update its software to properly report remittances to the state, figure out when the best time would be to collect payments from vacationers, and where to post certificates of occupancy within rental properties.
“This year, we collected the tax on the final payments because there were so many unknowns,” she said. “When we book a property, there’s a two payment lease. Half is due at signing, half is due 60 days prior to arrival. But if a tenant isn’t forthcoming about the second payment, then the liability would be on me for the tax.”
Despite that, Ms. Mayhew said Sandpiper had its best rental year ever. She said she was proactive about informing renters of the tax. But she did express
concern about repeat bookings now that the tax will be in effect for all of next summer. Some people who don’t have ties to the Vineyard have hinted they will look for areas with cheaper overall rentals, she said. Rentals booked before Jan. 1, 2019 were exempt from the tax this year.
“We had a fantastic summer,” Ms. Mayhew said. “It was a peak year again for us . . . Since the law came about on Jan. 1 it did not seem to slow down the bookings. We are getting some pushback now from our repeat tenants because some of them may not have heard about the tax.”
Contacted by the Gazette Thursday, a spokesman for the DOR was unable to immediately provide information on the amount of revenue collected so far from the new tax this summer.
Oak Bluffs town administrator Bob Whritenour said while he is still waiting on numbers from the state, the rental tax didn’t appear to affect business in the town. Seasonal receipts from the harbor, as well as food and rooms excise taxes were up five per cent over last summer.
“We had a very robust July and August,” Mr. Whritenour said. “It was very busy here in town.”
Ms. Weedon said factors other than the rental tax could also account for the downturn in bookings in the region. She said the value of the dollar is strong against the Euro, which could have prompted vacationers to travel out of the country. Every state in New England has now adopted a short-term rental tax.
With the tax in full effect for the 2020 summer, Ms. Mayhew and Ms. Weedon said increased awareness could help stave off sticker shock for renters. A legal advocacy group for the Massachusetts Board of Realtors is working with the Department of Revenue to hammer out some issues like occupancy certificates. And Ms. Mayhew said she is encouraging renters not to increase rates because of the tax.
“Any of our tried-and-true repeat tenants are coming back — they may not be happy about it but they are swallowing it and going to come back,” she said.
Meanwhile, Ms. Weedon said inquiries for the 2020 summer are soaring, with a 32 per cent increase in 2020 prebookings over this same time last year.
“It is the new norm, and people will have to accept it one way or another,” she said.

Comments
Administrivia is the big
T Bone Oak BluffsAdministrivia is the big issue? Sand Piper and other rental agents have software available to deal with taxes. Figure it out and finally pay a fair share. The towns will benefit. Honestly, the Island is still crammed full of visitors spending money. I have little sympathy for owners and their rental agents.
I disagree with the notion it
John Aldeborgh EdgartownI disagree with the notion it’s the new normal. With that attitude the government will be encouraged to either raise the tax rate or invent a new incremental tax, they’re very creative when it comes to new types of taxes. The economy is currently at a very high level, this will change. When it does both the homeowners and vacationers will lose because people will stop coming and/or homeowners will be forced to both eat the cost and lower rents. Actions have consequences and in time this tax will prove to be bad for Martha’s Vineyard. I don’t rent my home on the island so I don’t have a dog in this race but it’s obvious this isn’t good for the community.
That's all they do in this
Darn Shame Oak BluffsThat's all they do in this state and on this island is tax. They want more and more and more and won't be satisfied till they get it all. Typical democrats.
My wife and I will NOT back.
Donald amorosa Edgartown renter for years.My wife and I will NOT back.
Donald Amorosa: This law
Jane EdgartownDonald Amorosa: This law applies to any town in Massachusetts ...
This tax was a money grab,
George KatamaThis tax was a money grab, pure and simple. There was never an expressed need, nor can anyone tell you how the funds will be used. “If you drive a car, I'll tax the street
If you try to sit, I'll tax your seat
If you get too cold, I'll tax the heat
If you take a walk, I'll tax your feet
'Cause I'm the taxman, yeah, I'm the taxman”
Many Island Brokers and this
Jane Chittick, Broker and rental Owner EdgartownMany Island Brokers and this author did not fully understand the new law. I am both a licensed Broker and have a rental property in which I live. The state classifies me as a Bed and Breakfast owner and NO TAXES are imposed "However, private owner-occupied houses where three or fewer rooms are rented, a breakfast* is included in the rent and all accommodations are reserved in advance, are defined as a bed and breakfast home and are not subject to the room occupancy excise".
* "A breakfast" can mean a drink and at least one edible thing: Coffee, Tea or Milk or a Breakfast Bar anyone?
I am a fan of this new law.
Fan MVI am a fan of this new law. It means more money for towns that don’t come out of residents pockets. Yes, it means a few less people visit, and a few people who bet on property over the stock market (bad bet) get stung. So what? Cash flowing in to town coffers that are dry, a few marginal opportunist landlords get squeezed, and less likelihood I will get cut off by some jerk with fill in the blank (NY, Jersey, CT) plates while going about my modest business. This is a win. They will keep coming, but maybe a few less. And we will be better funded as well. Nice all around! Capitalism at its best.
In addition to the new tax,
Chip Bernacchio Passing On Owner's Fee to Rental Agency/SiteIn addition to the new tax, some renters are passing on their brokers fee. I pass those without hesitation.
Because of this law, I have
Nan Oak BluffsBecause of this law, I have decided to no longer offer short-term rentals. That will hurt, as the rentals helped with the upkeep of my house. I'm now waiting for these taxing authorities to find a way to tax longer-term rentals. I am so sure they will.
Rental income is already
Mark EdgartownRental income is already taxed at the federal and state level, these new taxes are the government double dipping and are an egregious money grab. This law was meant to snuff out illegal rentals in heavily zoned city areas. The current application will only hurt the local economy in which construction and hospitality jobs are completely dependent on seasonal visitors. This is akin to killing and roasting the golden goose to get fat.
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