Major Impact of New Lodging Tax on Cape & Islands Vacation Rentals

Major Impact of New Lodging Tax on Cape & Islands Vacation Rentals

May 22, 2019 The sudden passing of the new MA Lodging Tax for short-term rentals has caused significant disruption and confusion for both vacationers and for homeowners and property managers on the Cape and Islands. Although vacationers are technically responsible for paying the tax, homeowners and property managers have been thrust overnight into new logistical and financial burdens such as registration of their homes, paying for permits, collecting and remitting the tax, and procuring additional liability insurance coverage. But their biggest concern is: what will the impact of these substantial taxes (as much as 14.45% in some towns) have on their ability to fill their homes this season?

Has the tax impacted vacation rental bookings so far?
Inquiries and bookings on were exceptionally strong during December and early January – prior to the passing of the new tax. Since then, however, bookings have leveled off. To date, summer bookings for the entire Cape and Islands are off 0.7% over the same period last year. The Cape alone is off 1%, Martha’s Vineyard is up 2%, and Nantucket is off as much as 4.1%. We believe that, in anticipation of the tax, owners rushed to get leases signed by repeat guests prior to Jan. 1. Thus, it’s likely that the slowdown we’re seeing is a result of the tax. Many realtors are expressing concern about bookings being significantly down from prior years.

Our records indicate far more cases of homeowners dropping their prices significantly than at this point last year. And many have posted special offers specifically offering to diminish the impact of the tax on their guests.

How vacationers can mitigate the tax impact
Be resourceful: join forces with friends or family, for example, to share the costs.
Lower your rental price cap to leave money for the tax: consider a home that is not on or walking distance of a beach, one that is on a freshwater pond instead or that might not have AC or other expensive amenities.
Take a less prime-time week than the last weeks of July and first weeks of August. Homeowners often discount their rates for less popular times such as the beginning of July or last week of August.
If your schedule is flexible, avoid the tax by taking your vacation prior to the July 1 start date (even the Fourth of July week is exempt if you arrive prior to July 1).
Avoid the Big Box websites that require vacationers to pay booking fees of 5 – 20% in addition to the new tax.
Look for Owner Specials, and use our Last-minute Availability and Deals page to identify some great last-minute values.

Impact on the Cape and Islands Tourism Industry
Another concern is that the new Lodging Tax could significantly impact the lifeblood of the Cape and Islands: the tourism industry. Suddenly charging as much as nearly 15% on weekly vacation homes will undoubtedly cause vacationers to opt out of such indulgences as whale watching, dining out, shopping, boat and bike rentals, etc.

Helpful resources’s Lodging Tax FAQ’s
Dept. of Revenue’s new Lodging Tax FAQ’s
Our Homeowner Blog post: The 2019 Vacation Rental Checklist for Homeowners
Our Vacationer Blog post: Vacationing on a Budget

About Since 1997, WeNeedaVacation has been providing an efficient and inexpensive way of matching vacationers and vacation rental homes. The website lists more than 3,500 properties on Cape Cod, Martha’s Vineyard, and Nantucket. WeNeedaVacation has also initiated a green program where homeowners and vacationers concerned about the future of the Cape and Islands can take some achievable steps to lessen their impacts. Our amazing staff collectively has over 100 years of experience as Cape & Islands vacation rental homeowners. We love the Cape and Islands, work hard to promote this special place, and proudly belong to 17 local Chambers of Commerce.

Author: Mashpee Chamber of Commerce

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