With the prevalence of websites such as AirBnb and HomeAway, using your Massachusetts home for short-term vacation rentals can be appealing. Many folks are doing this with an investment property, second home, or in-law apartment attached to a main home. Short-term rentals are appealing to travelers who prefer the comfort and convenience of a home over a hotel. If you are or plan on exploring this opportunity, here are a few things that you should know.
Be aware of Massachusetts and city/town laws on short-term rentals. There is currently a tax bill making its way through the system that would add a hotel tax, local tax, and more to such rentals. Some communities have additional regulations. In fact, some ban nightly rentals entirely. Others require registration with the city/town, regular safety inspections, etc. Renting for residential versus commercial use may also be restricted. Be sure to check with your local city/town to learn about the specific regulations that apply to your property.
Additional liability insurance is required by some municipalities when using your Massachusetts home for short-term vacation rentals. Even if not required, it’s a good idea to do so anyway. As the owner, you will be liable for injuries to any occupants or visitors to the property. Your Massachusetts homeowner’s insurance should provide adequate coverage for that specific use. Failure to notify your insurance company of short-term rental usage of the property could result in denial of any claims, so it’s extremely important that you contact your insurance company in advance. Purchasing an additional umbrella insurance policy is also a good idea.
When using your property to generate income in new or unconventional ways, it’s important to stay up-to-date on rules and take measures to minimize your liability. Be sure to also report any income on your federal and state income taxes. Failure to follow the rules or properly report income can result in serious penalties and fines. Furthermore, not carrying adequate insurance coverage can leave you financially at-risk. Stay educated and follow the rules to operate a legal and successful short-term rental operation.