If you are considering assisting in rental property, STOP! MAR has wonderful forms in their library to assist you in that process, but, the Broker of the firm must first be well versed in rental law in the state, and especially new tax laws passed in 2019 regarding occupancy excise taxes and other local taxes and fees that may apply. Generally, the room occupancy excise tax was collected and paid by a owner – but as of July 1, 2019, new rules require an intermediary (can be the REALTOR) or other agent collecting rent, to file returns and pay taxes to DOR on the rentals. The MAR Exclusive Right to Rent form states that the brokerage will collect, file and pay taxes due on the owner’s behalf.
When speaking with MAR counsel about a Broker’s ability to “opt-out” of this obligation by not actually collecting the rent, we discovered (as typically) the answer is not so clear. The Short Term Rental (STR) tax collection reference to ‘intermediator’ as the Broker arranging the rental AND collecting the rent, BUT in some parts, the verbiage is open to interpretation by a judge. The state’s STR website says, “An intermediary includes a broker, hosting platform, or operator’s agent. An operator’s agent is anyone who manages a property for rent or books reservations of a property for rent. An operator’s agent includes a property manager, property management company, or real estate agent.” Well, that’s broad. This is a new law and a judge could rule that if a broker is performing all the tasks to facilitate a STR except collecting rent then the REALTOR could be deemed to be an intermediary with responsibility to ensure that taxes are collected and paid to the MA Department of Revenue. Given this, it is VERY important any brokerage considering assisting in short term rentals consult with legal counsel and tax professionals before any agent obligates them to very serious consequences with the state. Details: https://www.mass.gov/info-details/room-occupancy-excise-tax