Article 66, on the warrant for the Annual Town Meeting, proposes to expand the room occupancy tax currently in place on hotels, inns and guest houses, to include the rental of private homes. We are against this article for a variety of reasons and on Saturday spoke to the Civic League about our perspective:
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 considered taxable income.
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, reporting and paying of a tax on private rental homes.
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 any tax.
The tax is not tax-deductible.