Beginning January 1, 2023, an additional 3% community impact fee will be applied on occupancies of short-term rental units in Provincetown which meet the Commonwealth’s definition of a “professionally-managed” unit. A short-term rental unit may be considered professionally managed for this purpose whether or not an intermediary is involved.
This fee applies to short-term rentals that:
- Are one of two or more short-term rental units located in Provincetown;
- Have the same operator;
- Are not located in an owner-occupied single-family, two-family, or 3-family dwelling.
The total tax on these occupancies is 17.45% (which includes 5.7% state tax, 6.0% local tax, 2.75% Cape Cod and Islands Water Protection Fund Tax, and 3% community impact fee for professionally managed units) of the total amount of the rent. Additional information is available at https://www.mass.gov/info-details/room-occupancy-excise-tax.
Passed by voters at Provincetown’s Spring 2022 Town Meeting, the intent is to discourage the “warehousing” of apartments for short term rentals, where developers purchase several units for the distinct purpose of renting them short-term, thereby removing them from the inventory of seasonal or year-round occupancy.
100% of all fees collected under the Local Option Community Impact Fee will be split between the Town’s two existing housing funds: the Affordable Housing Trust Fund (AHTF) and Year-Round Market Rate Rental Housing Trust (YRMRRHT).
This 3% community impact fee does not apply to:
- Owners who rent a single unit;
- Licensed businesses;
- Owners who rent one or two units from a property listed as the owner’s primary residence.
For these rentals, the total tax remains unchanged and is 14.45% (which includes 5.7% state tax, 6.0% local tax, and 2.75% Cape Cod and Islands Water Protection Fund Tax) of the total amount of the rent.
The Provincetown Board of Health Habitations for Rent regulations apply to all forms of rental property including weekly, seasonal, and year-round. If you are renting your property, you are required to obtain a Renter's Certificate regardless of the duration of your rental(s).
More information on how to obtain a Rental Certificate in Provincetown can be found at: https://provincetownma.viewpointcloud.com/categories/1087.
Short-term rental operators in Provincetown need to also register with the Massachusetts Department of Revenue (DOR) through MassTaxConnect.
Those with questions about how the 3% community impact fee will impact their applicable short-term rental units or how to register with the Commonwealth through MassTaxConnect should contact MassDOR at (800) 392-6089.