January 14, 2019
Cape Cod & Islands Water Protection Trust Fund to be collected by Hotels, Motels, Inns and Bed & Breakfast Establishments
When Commonwealth of Massachusetts’ new short term rental tax was passed into law the last week of December, 2018, it included a new trust fund to pay for Cape Cod’s wastewater management. This must be collected by ALL accommodations, including those who have been collecting the local and state occupancy tax.
This Cape Cod & Islands Water Protection Trust Fund collections begin with every guest stay ON OR AFTER JULY 1, 2019 regardless of when the reservation was made or paid. The Trust Fund fee is 2.75%. It is paid to the DOR each month, along with your occupancy tax, in the same manner and at the same time.
The Water Protection Trust Fund was established in order help pay for wastewater management, saving $1 billion in property taxes in Barnstable County*. Only the Cape & Island municipalities can access this fund. *Currently, this applies only to Barnstable County, but may be adopted by the islands in the near future.
Cape Cod & Islands Water Protection Trust Fund must be collected by
Short Term Rentals as well as the Room Occupancy Tax Requirement
Beginning on July 1, 2019, a new tax will be assessed on short term rentals. This tax is levied at the same rate as the traditional room occupancy tax and applies to any stay on or after that date (unless the rental contract was executed before January 1, 2019. Payments to the MA Dept. of Revenue will be required monthly. Registration will be required with MA Dept. of Revenue, and details are found here https://www.mass.gov/info-details/short-term-rentalsfrequently-asked-questions#overview-. New regulations for registration of short term rentals are to be released on or by September 30, 2019 from the Executive Office of Housing & Economic Development. Each municipality may also regulate the existence or location of short term rentals, require health and safety inspections, and to post information regarding fire, extinguishers, gas shut off valves, fire exits and fire alarms.
The 2.75% Water Protection Trust Fund will also begin with any stay on or after July 1, 2019, and will apply equally to all accommodations’ transactions, short term rentals or traditional hotels, motels and B&Bs.
The Cape & Islands Association of Realtors has issued this guidance for homeowners and managers of short term rentals: https://www.cciaor.com/shorttermrentals/.
– Exempt are the following from the room occupancy excise:
o Certified alcohol and drug free housing
o Tenancies-at-will/month to month leases
o Lodging accommodations provided to seasonal employees by employers
o Employees of the U.S. Military from the excise on short-term rentals/transient accommodations while traveling on official orders.
o Time-share units to avoid double taxation.