Nantucket’s Annual Town Meeting begins next Monday, April 4 at 7:00 PM. Among the articles that are bound to generate discussion is Article 31, which, if passed, would impose a 6% tax on the rental of private homes. The proponents of this article are members of the lodging industry who feel that it is unfair for the state room occupancy tax not to be levied on private home owners. Other proponents include some town officials looking for additional sources of revenue.
The rental of private homes cannot be compared to the operation of a commercial business such as an inn, guest house or hotel. A large number of Nantucket homeowners rent out a few weeks in their homes to help make ends meet and defray the rising cost of ownership (property taxes, sewer and landfill fees, etc.) Not one single private home on Nantucket is operating as a profitable business. In fact, rental prices and volume have softened considerably since the recession.
A guest who stays in a hotel, inn or guest house has the assurance that the property meets certain standards such as fire and safety, handicapped access, occupancy restrictions and inspections by the local Health Department. This is not the case with the rental of private homes.
The federal government permits the rental of a private home up to 14 days annually without requiring that the rental income be reported.considered taxable income. Would the tax be tax deductible?
If the article passes, home owners will likely pass the cost on to tenants, further raising the cost of coming to the island for our valued visitors.
There is no mechanism in place to monitor the assessing, collecting and paying of a tax on private rental homes which would mean that it is on the honor system. There is no enforcing authority.
What are the unintended consequences of this article? One thing that will happen is that more property owners will try to do rentals directly through on-line booking services, making it even harder to assess, collect, report and pay the any tax.
We urge you to attend Town Meeting and to vote No on Article 31.