The new MA shared rental law goes into effect July 1. Thankfully Airbnb has added a line so that they collect the new occupancy tax. However, we still need to register our rooms and track our guests. We already have a sign in card so that part is not a big deal. What is killing us is the insurance requirement. The only agent who will even talk to me about this, my current agent, has only been able to find a suitable policy that increase my premium $2500 a year. That would increase my room rate $25 a night. That will never fly in my market. I speak with other hosts who say they will ignore it since its very unclear how that provision will be enforced. That creates a very unlevel playing field. We all tell Airbnb that we observe all pertinent local, state and federal laws, but validating that across all rentals would be impossible for Airbnb. Are there any other MA hosts struggling with this?
Uhm, if everyone is playing by the rules then everyone will have this expense and rates will go up across the board I would think…
RR
Report them, report to Air, report to city.
RR
@Christine_Shirtcliff
There’s another extensive thread about the new MA STR tax and from that, I will mention that my research on it as of this past weekend was that they are NOT computing the tax correctly as they aren’t charging it on the booking/service fee as law requires. So don’t be so sure that it’s working until you can prove it.
Thank you for that warning!
@Christine_Shirtcliff
As to insurance, my cottages are via MPIUA Fair Plan so have to have separate liability policy which is about $700-ish for all six of my units so don’t know why you’re getting such a high quote.
I am in Western MA so I don’t believe that the MPIUA Fair Plan is available to us. That would certainly be a bearable premium.
That doesn’t seem to be incredibly over the top, depending on the coverage. What is scary though is the inference that you’ve been in the STR business without it. Surely to protect your property and your business you want it?
Again, increasing your price by $25 per night isn’t unreasonable surely as long as you’re offering value for money? Does it matter what other hosts are charging? Once they have their own insurance and licences then they’ll need to increase their prices too. (Or if they think they can fly under the radar - good luck to them. They’ll be laughing on the other side of their faces when they get the huge fines).
The hospitality industry always has been. That’s free enterprise.
The local authorities will though. It’s part of their role. Here, we have pretty strict STR requirements so hosts either comply with them or eventually, if they’re lucky, get closed down. The unlucky ones get huge fines that accumulate on a daily basis.
I have an Airbnb near Boston and use proper insurance. My insurance went from $1000 to $2000 which seems reasonable given that it was a commercial property. So perhaps you should check them out. That’s only a $1000 increase over what I was already paying.
Thanks for your input. Unfortunately the increase is 30% which might lose us some repeat guests whom we love to see. I understand what you mean about the marketplace. Perhaps it will just take a year or two to settle out. Some hosts will drop out or step up their compliance and then things will be more even. I was expecting some increase just not that much. We really want to continue with a local agent, but sometimes they don’t navigate coverage for the more complicated properties easily. That doesn’t instill much confidence that we are finding the best option.
My experience is that many do, not just a few. A few years ago there were (truly) dozens of Airbnb rentals on my very short (half a mile) street. There was a rental right next door to ours and one directly below. The one opposite that was also a rental. (That’s in a complex of 12 apartments).
In the building right next door, as tenants moved on the owner converted each apartment to be used on Airbnb. They were priced at about a third of our price. The owner owned the building outright so didn’t need to cover mortgage costs. He also didn’t get the required licences and insurance.
The moral of this story (I got there in the end) is that now they are all gone. We remain. So many people realise that Airbnb isn’t easy, isn’t a way to make a residual income, isn’t an amazing cash cow that has no regulation or consequences and so they give up.
I can’t speak to the MA laws, but you might also get a quote from State Farm. If you’re sharing your primary residence with people it’s a simple rider on your regular HO insurance. I think it only cost me $3-400 extra/year.
@Christine_Shirtcliff
No, I’m saying that because my regular insurance (fire/wind/etc) is via FAIR, i have to have a SEPARATE liability policy as FAIR plan doesn’t cover the need I have.
I would check with other agencies to see what options they have. Now there may be something in your home that would prevent certain companies from writing policy, like older electric panels, etc.
Thanks! I am following up all leads.
Yes, they will use the revenue to hire someone for enforcement, and that will bring in more revenue. It is a win win situation for the city if handled right.
RR
I am in a small town that doesn’t really have the staff for much enforcement. Thankfully they have no municipal tax, but that also means no funds to use for enforcement of state rules.
Christine - forgive me but it sounds as though you’re thinking of flying under the radar? Remember that Airbnb is an online service. Your local authority doesn’t need people, vehicles, vans, cameras etc., they only have to instruct an intern to check Airbnb listings from time to time.
Everything is there, including your calendar to show how booked you are. Its a quick step to then check the computer to see if you’re registered and have a licence.
I don’t want to sound off putting but those fines are three (or sometimes four) figures per day. A licence and some insurance is a small price to pay for peace of mind.
I dont think the % collected and submitted matters at all once Airbnb and the state enter into their mutual agreement regarding the taxes.
not all small towns will hire a person.
Our town admin said no…and council agrees.
But they did buy the software to track who is listed in order to collect, and slap the fines on.
@georgygirlofairbnb
I am not sure who’s going to take responsibility if Airbnb either under or over collects tax from the guest given the lack of response that I got from their CS who tried to pass the buck to " your local tax preparer" which is totally irrelevant.
You have been relieved of full responsiblity to the State of Mass if Airbnb entered into a formal agreement with the State. Once that is done the State will not come after any individuals.