Short-Term Rentals (4 of 4)
In this final blog post in this 4-part series of short-term rentals, we will review the eccentricities of laws in Vermont and Maine, states with a lot of tourist activity and many out-of-state owners of ski cabins and oceanfront homes.
Vermont views a small-scale short-term rental operation in the same lens as a larger bed and breakfast. This is true even if you are only renting out a camper, tent, or bunkhouse, as well as a cabin, house, condo, or bedroom. There are a few exceptions to this rule:
- Rentals of less than 15 days in any calendar year
- Renting a lodging to the same person for more than 30 days (considered a permanent resident)
- Lodging offered as a benefit of employment
- Rooming in a summer camp for children
In Vermont, effective July 1, 2018, short-term rental operators are required to post their Meals and Rooms (M&R) tax account number on any advertisement (if using a platform which is already collecting and remitting the tax, such as Airbnb, the platform’s number can be provided). The Vermont tax rate on short-term rentals is 9%.
Certain municipalities also charge an additional 1% local tax and have their own filing requirements. Make sure to look up or contact your municipality for this information.
If you rent by means other than Airbnb, you will be required to obtain the M&R account number and collect and remit taxes on these rentals. If you rent via both Airbnb and another service, Airbnb will report rentals through that service and you will separately have to report the other rentals.
Health and Safety
Vermont requires operators to post within the unit the telephone for the person responsible for the unit as well as the number for the Department of Health and the number for the Department of Public Safety’s Division of Fire Safety.
The Department of Taxes will distribute an informational packet to all new registrants of an M&R license number to help understand the requirements. This will include an encouragement to review your property and liability insurance as well as a health and safety self-certification form to complete and keep on record in case of inspection.
What if I’m already delinquent?
Vermont has a Voluntary Disclosure program that non-compliant operators can take advantage of. While operators would typically be liable for 7 years of tax, interest, and penalty, participation in the program may reduce that liability to 3 years of tax and interest. This is a great benefit and a good option to be brought into compliance. However, if you only rented rooms on Airbnb before they made the agreement with Vermont to take care of the tax collection as of January 1, 2017, the State does not plan to pursue collection, so you may not have to worry about a Voluntary Disclosure.
There is a bit of local regulation of short-term rentals in Maine as municipalities try to balance the needs of tourists with long-term housing needs of residents. For example, the City of South Portland restricted short-term rentals to hosted stays only, which means the owner has to be present. This essentially bans short-term rental of vacation properties. In Bar Harbor, single family homes can only be rented for periods of 5 to 30 days. Operators in many municipalities are subject to permits and fire safety inspections.
The issue of short-term rentals “taking over neighborhoods” is a pressing issue for the state and municipalities and is receiving a great deal of media attention as each side vies for its input to be heard. While many municipalities are doing all but outright banning short-term rentals, the state has considered legislation to restrict the ability of municipalities to regulate these rentals. It is safe to say that the rental environment in
Maine is uncertain and possibly hostile, and any moves to set up short-term rentals in certain areas are fraught with risk.
The Maine sales tax rate for short-term housing is 9%. Rooms rented for less than 15 days a year or more than 28 consecutive days by a single tenant are exempt.
This concludes our series on vacation rentals in upper New England. We hope you’ve enjoyed this series and encourage you to reach out if you need assistance in this area.
Sign Up for Our Newsletter
Want to keep up-to-date on what's happening at Melanson and in the accounting world? Our newsletter offers tips and tricks for planning and preparation all year long.