The room occupancy excise tax applies to room rentals of 90 days or less in hotels, motels, bed and breakfast establishments, and lodging houses. Massachusetts cities and towns are permitted to charge a local room occupancy excise tax up to 6%.
Beginning July 1, 2019, for short-term rentals only, cities and towns are permitted to charge an additional community impact fee up to 3% if an operator has more than one property in that locality or is renting an owner-occupied 2 or 3 family house on a short-term rental basis. Generally, the room occupancy excise is collected and paid to DOR by a person or business called an operator. As of July 1, 2019, new rules require an intermediary or other agent collecting rent to file returns and pay taxes to DOR.
Short-term rental: A short-term rental is an occupied property that is not a hotel, motel, lodging house or bed and breakfast establishment, where at least one room or unit is rented out by an operator through the use of advance reservations. A short-term rental includes an apartment, house, cottage, and condominium. It does not include property that is rented out through tenancies at will or month-to-month leases. It also does not include time-share property or bed and breakfast homes.
Here are some Frequently Asked Questions provided by the Massachusetts Department of Revenue.