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The Nantucket Life

Jordan Real Estate

Happy Stroll!

 

The Holiday Season is upon us.  We end the season here on Nantucket the same way we begin. Wine festival followed abruptly by Figawi, and before you know it, Thanksgiving followed immediately by Stroll.  Black Friday for us marks the day Christmas goes into overdrive.  The trees go up in a day, we hold a jolly ceremony to light them all at once and then the week leading up to Stroll they are decorated.  It’s a real bona fide Santa’s workshop here on island.  An entire month of merriness, shopping and parties. You can smell balsam fir all the way to ‘Sconset.  Nantucket is the closest you can get to Whoville on the entire east coast (this weekend you may even see outfits inspired by Dr. Seuss).  If you’re looking for real estate, this is a great time to see the town lit up, and how the community turns out (locals and visitors) to celebrate how special the island is, and that we’re not just a summer destination.

The proposed rental tax was not passed in 2018 even though the State Senate and House passed it.  Governor Baker didn’t sign the bill but sent it back with revisions.  It is unlikely that it will be passed before the new term in 2019.  If the bill passes early in 2019 there would likely be a grace period until at least March for any new leases.  The commonwealth doesn’t have the infrastructure in place to start the process currently, and towns haven’t voted on what they might charge.  We will continue to keep you informed of this upcoming rental tax.

That said, it’s a good idea to get leases signed for the Summer of 2019 as early as possible.

Stop by 8 Federal Street this weekend if you have any questions or just to say hi to our in-house Nantucket experts.

Massachusetts Short-term Rental Tax

Governor Baker signed into law a bill regulating and taxing short-term rentals.  The details we have collected so far are as follows:

The tax is to be paid by the tenant.

State Tax: 5.7% 

Local Tax:  6% on Nantucket

Cape Cod & Islands Water Protection Fund: 2.75%
Community impact tax: 3%
*The Town of Nantucket has yet to vote on these specific taxes.   

For stays starting July 1, 2019 that are booked January 1, 2019 or later. If a lease was signed prior to January 1st, no tax is due.

For any stays of 31 days or less.

Each rental unit will need to be listed with the state short-term rental registry.

The law requires whoever collects payment for the rental to collect the tax and remit it to the Commonwealth. The Department of Revenue will issue regulations to clarify how often the tax should be remitted to the Department.

Every home owner that rents out their property must carry not less than $1 million of liability coverage for each stay unless the hosting platform provides equal or greater coverage. Coverage shall defend and indemnify the operator and any tenants or owners in the building for bodily injury and property damage arising from the short-term rental. However, if the hosting platform (the real estate brokerage, HomeAway, Airbnb, etc.) can elect to provide the coverage for their properties on behalf of the owner.

The tax imposed by the new law does not apply to properties rented for fewer than fourteen (14) days per calendar year. It is important to note that these properties are still subject to the other requirements of the law, such as insurance and registration and these properties must file a notice with the Department of Regulation saying they will only rent for less than 14 days and will be responsible for paying the taxes themselves if rented for more than 14 days and did not collect it for the first 14 days.

Cities and towns may implement a health and safety inspection requirement and set the frequency of inspections. Short-term rental operators are required to cover the cost of inspections and will likely face a fee to cover registration costs as well.

New Short Term Rental Documents:

Insurance Disclosure to Homeowners

14-Day Exemption Form

We will continue to keep you updated as we receive more information.

Tax Details

The rental market is in full swing.    We’ve had many calls inquiring about the new rental tax.  So here is a quick summary of what we know.   The rental tax will start at 11.7% this year.  This may change at any time.  The most important bullet points are as follows but for complete information please visit mass.gov or call Jordan Real Estate to talk to one of our knowledgeable brokers.

For any leases signed after January 1, 2019, an 11.7% occupancy tax will be attached.  For this year only, leases where the arrival date is prior to July 1, 2019 are exempt from the tax.  This also does not apply to leases longer than 31 days.  If a homeowner only leases their home for 2 weeks out of the year, the tenants who rent for those 2 weeks are exempt from the tax.  The occupancy tax will be paid by the tenant, just as they would pay if staying at a hotel or Bed and Breakfast.  As an agent of the homeowner, we (Jordan Real Estate) will be collecting the tax and remitting it to the state and local authorities.  Also just to clear up a common misconception, the tax is not included in the rent, while the commission is included.  So an additional 11.7% will be added to the cost of rent not subtracted from it (as the commission is).  Homeowners will be required to have a minimum or 1 Million dollars in insurance.  They will also be required to register their rental home.  As of now there is no such registry to add your rental home to, so it seems we will cycle back to that when the registry is live. Bottom Line is, no one likes paying taxes, but it is what it is and we’re all going to have to get used to it.  You can’t bargain with Uncle Sam.

Time is of the essence.  Homeowners please keep us updated as often as possible to any changes in your availability or your property in general.  Tenants if you haven’t booked your vacation contact us regarding your summer vacation while there is still inventory to chose from.