July 31, 2018

Baker considering exemption to Airbnb bill

Photo | State House News Service
Gov. Charlie Baker

Gov. Charlie Baker is considering returning the bill sent to him Monday by the Legislature taxing and regulating short-term housing rentals with an amendment to exempt from taxation owners that rent out their homes or apartments for less than two weeks a year, according sources familiar with ongoing talks.

The governor's team discussed the idea with legislative leaders Monday evening just hours after a compromise bill to regulate and tax the short-term rental market cleared the House and Senate. While the governor has concerns about the bill, his team is also cognizant that any amendment he files after Tuesday could doom the entire bill.

The conference committee led by Rep. Aaron Michlewitz and Sen. Michael Rodrigues struck a deal Sunday night to tax short-term rentals through websites like Airbnb at the same 5.7 percent lodging tax applied to hotel and motel room rentals.

Cities and towns would have the option to levy an additional 6 percent tax on all short-term rental units, or up to 9 percent if the owner controls two or more units in the same municipality. Short-term rental units would also have to be registered by owners with the state.

While Baker has not been opposed to taxing short-term rentals, his focus has always been on property owners who are operating de facto hotels through Airbnb and other portals by buying up properties and renting them full-time.

He filed his own legislation this session that would have applied the state lodging tax to units rented more than 150 days a year.

According to sources close to the ongoing talks between the Legislature and the administration, Baker is considering an amendment that would exempt from new taxes any units that are rented for less than 14 days per year, but has not yet settled on that course of action.

The governor's team also raised concerns Monday night with the legislative authors of the bill about a change made to the legal definition of "occupancy," which controls when the lodging tax is applied.

Current law defines occupancy for the purpose of a hotel or motel rental as a unit rented for up to 90 days. If a guest stays in a unit longer than 90 days, they no longer have to pay the tax and become subject to landlord-tenant laws.

The compromise Airbnb bill would reduce that window to 31 days, and the administration conveyed to lawmakers that they are concerned that not only could the change reduce the amount of lodging tax revenue coming to the state, but it might also violate the bond terms for the Boston Convention and Exhibition Center.

Legislative leaders disagree with the administration's concern over revenue, but are reviewing other issues brought up by the Republican's team.

Michlewitz declined to comment Monday night on any talks ongoing between the House and the administration, and Rodrigues told the News Service early in the evening that the Legislature would be prepared to respond to whatever the governor decides.

The governor's team, according sources, did not commit to any timeframe for acting on the Airbnb bill, but if the Legislature were unable to respond to an amendment before midnight on Tuesday, it might signal the end to the debate until 2019.

"I don't think it would pass in informal session," said one official in the Legislature.

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