For decades, the residents of Cape Cod have been boosting the local tourism industry by contributing their bit via rental properties. Every year, a huge number of local, national, and international tourists flock to the seaside to capture the historical New England summer. In recent years, the government, state and local, have had a new short-term rental law in talks. If and when this bill is passed, it will impact the local tourism industry run mostly by homeowners who make a living out of renting their spare rooms, homes and property. Our property management services have been a medium for these homeowners to keep their financial situation thriving. We, as an active member of Cape community, want our homeowners, clients, and Cape Codders to know what this bill is, how it will affect us, and most importantly, what we can do about it.
What the New Law is All About
For our lovely Cape community, the short-term rental lodging tax will likely be passed sometime later this year. According to the bill, the lodgings will be divide into three main categories based on the duration of stay of occupants and the management of the hosts.
- Residential Hosts: This category will only be allowed to rent out their property/part of the property for less than 60 days a year. They will be required to pay a 4% tax to the state and an additional (if imposed) local tax of up to 5% to the town.
- Commercial Hosts: This category may rent out their property/part of the property for more than 60 days a year, or even rent multiple units simultaneously. They will be required to pay an 8% tax to the state and an additional (if approved) local tax of up to 10% to the town.
- Professionally-Managed Hosts: This category will include lodging businesses and individuals who use a property management company to keep their property rented for no less than five nights. They will be required to pay a 5.8% tax to state and an additional (if approved) local tax of up to 6% to the town.
How It Will Affect Homeowners in Cape Cod
Since the Cape Cod community runs majorly on the tourism industry, there is a great number of homeowners who rent out their properties during the vacation season to make ends meet. Most invest in a seasonal cycle to earn extra revenue for their loved ones. However, if this bill is passed, it will surely affect many homeowners who rely partially or fully on the earnings during the summer vacations. According to a report, “75% of the tourists who visit Cape Cod stay in vacation rentals”. If the hosts have to share additional taxes, the prices of their services will go up as well. There is already a decline in the number of foreign tourists visiting Cape Cod and a decline in the number of national tourists who have started preferring cheaper vacation spots. Any amount of addition into the prices will surely scare away potential visitors while adversely affecting the earnings and lives of the Cape community.
What We Can Do About It?
The short-term rental law has been in the pipeline for years, but its recent activity will surely get it passed sooner than later. However, till it is set in ink, we have the option of adding to it and subtracting from it. If you are a homeowner that uses any of the leading Cape Cod property management service to keep a check on your rental property, we advise that you get in touch with your elected state representatives. An email, a letter, or a phone call will not go unnoticed. Find out about activists who will guide you better in making your say count in the longer run. Act now, before it’s too late.
For more questions on property management; drop us a line at (508) 534-8044.