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Short-term gains exacerbate housing market

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As housing available to island residents continues to decline year-round, all six towns benefit from increased demand for short-term rentals by levying large excise taxes for holiday stays. increase.

Affordable and reliable rental units for the grape growers who call the island home 12 months out of the year are no more, and local governments are being challenged for any efforts to increase access to affordable housing. I started looking.

of Housing Bank Islandwide Approval Teachers, hospital workers and first responders displaced from housing proved awareness of the housing crisis at all six town meetings this spring, initially brought up by the Coalition to Create Martha’s Vineyard Housing Bank. showed the possibility of salvation. market..

Real estate trends on Martha’s Vineyard tend to follow those of its sister island, Nantucket. The median home price is $2.7 million. of 2021 — A glimpse of what vineyards may soon face when it comes to affordable housing.

Martha’s Vineyard Housing Bank, which will be funded by claiming a 2% commission from property sales of $1 million or more, was briefly considered several years ago and has since been abandoned. Utilization of short-term rental income is not included. .

but, Housing bank review committee finalizes details The housing crisis remains serious and pernicious before the Home Banking Act is introduced in the state legislature.

Followed by 2018 approval of short-term rental tax bill signed by Governor Charlie Baker and effective July 2019; Short-term rental tax revenues go into each town’s general fund, are indistinguishable at the municipal level where the tax originates, and are not allocated for any particular use.

Due to the Rental Tax Act, short-term rentals such as Airbnb are taxed by the State of Massachusetts at the same rate as hotels and inns at the rate of 5.7%. Administration of local taxes on short-term rentals is voluntary and the tax rate is set at the discretion of the town government and cannot exceed 6%.

Vineyard Haven, West Tisbury, and Oak Bluffs charge the highest rates, while Edgartown, Chillmark, and Aquinnah charge a 4% rate.

The state defines a short-term rental as “an occupied real estate property that is not a hotel, motel, lodging facility, or bed and breakfast establishment, where at least one room or unit is rented out by an operator using advance reservations. defined as “thing”. Short-term rentals are not limited to any type of residence, but exclude timeshares, properties rented “at will” and monthly leases. Rentals under $15 per night are not taxed.

T.He now does not require local governments to distinguish between the types of rentals that generate the most income with the revised room occupancy tax law. We then disrupt local data that helps us understand the rental market on a larger scale.

according to According to the Massachusetts Department of Revenue, between fiscal years 2013 and 2019, revenue from the island’s traditional lodging tax increased 6.67% annually, reaching $2.1 million in 2019.

By 2020, the lodging tax levied by island towns has risen dramatically, increasing by a whopping 63%. After rent taxes hit his $5.5 million in 2021, the town of vineyards recently ended he collected $8,631,200 in fiscal 2022. Of that, $5,775,393 is from short-term rental taxes, as confirmed by the State Department of Revenue.

Although not required, the town of Oak Bluffs declares rental tax by type.Clarifying the difference between tax collection and short-term rental of hotels and innsseconds. His 2021 traditional lodging income in town reached $257,863, which was topped 127% by taxes on short-term rentals to reach $1,162,644.

In Fiscal Year 22, Oak Bluffs hotels and inns saw growth in the town-collected lodging tax of $637,283, barely reaching short-term rental income of $1,694,716.

The Towns of Oak Bluffs and Edgartown had the highest short-term rental tax collections in the past two fiscal years, at $2,857,360 and $3,824,773 respectively, according to The Times, which asked island town officials where the money went. did. We emphasized first accumulating “historical data” about the collection before using it for a specific expense.

Deborah Potter, the town administrator of Oak Bluffs, expressed hesitation in committing to apportioning the town’s extra night tax to specific purposes. she said. She’ll probably have another year or two to track before she really starts relying on some of these earnings to be solid and consistent. “

Potter said it was difficult to tell whether the upward trend would continue as the COVID-19 pandemic may have impacted rental income streams in the short term. This is despite the fact that the short-term rental tax bill went into effect less than a year before the COVID-19 pandemic hit. Prior to that, the town had no means or records to ascertain how much money was generated by short-term rentals before taxation.

Edgartown town administrator James Hagerty said there had been various debates among city officials about how the money should be distributed after the 2019 local tax was enacted, but the income was for what purpose. It also said that it was not distributed to

Echoing Potter’s opinion, Hagerty said year-round and shoulder-season residency changes, many of which are related to COVID-19, add volatility to markets and revenue streams. explained.

“The question is, will that number increase or will it remain? [the same]? ” He said. Therefore, we need “a long basis of historical data to know or predict what will be in the future.” [tax money] we’re going to get

“Assigning [short-term rental revenue] Without a prematurely conservative mentality,” Haggerty said. [the town] in the long run. “Thanks to the collection, the town “has had no ups and downs even during COVID,” he said, adding, “It’s helped us to have no structural deficit in our budget.”

Mr. Hagerty said the lodging tax was put into the Capital Stability Fund last year, but “we are saving it rather than distributing it all.”

At the Tisbury Town Meeting in April, voters were presented with, and ultimately approved, a writ approving a $750,000 override of Proposition 2.5 for unspecified uses.

Tisbury town administrator Jay Grande told The Times the override was to “allow a cushion” to avoid the town “financially hitting a wall.”

He said there was no discussion among Tisbury officials specifically relating to the use or apportionment of the short-term rental tax.

B.Since returns are treated together with the traditional lodging tax when entering the general fund, the process by which the short-term rental tax fund can be used and distributed has changed from pre-excise reform, subject to voter approval at a town meeting. Is not …

As of July, Edgartown alone has 934 short-term rental properties on the state lodging register. This resulted in 590 units in Oak Bluffs, 439 in Vineyard Haven, 221 in West Tisbury, 275 in Chilmark and 93 in Aquinnah.

Current island-wide residences available on Airbnb averaging $1,934/night as of July 29 (including whole homes, private rooms, and shared rooms), and an average of about $1,165/night in the third week of August We provide “peace of mind” for dollars. Continue to receive large payouts from town transactions in Martha’s Vineyard.

As of July, a week’s vacation for a family of four in August runs between about $11,971 and $12,189, and depending on the municipality, between $1,058 and $1,276 in the relevant town.

The Martha’s Vineyard Chamber of Commerce website estimates that about 63% of the island’s dwellings are seasonal. Since then, there’s little data to show how many of them have been made available for year-round rentals, but history suggests that number is very low.

Seasonal homes that remain closed for off-season months and short-term rental housing registered on 2,500 islands have been priced too high for many years, offering help to secure affordable housing I have not.community and its teacherpolice officers, town officials, Business owners, restaurant and retail employeesartist, fisherman, hospital staffand the elderly demographic has been pushed aside and discounted.

In an interview with The Times, Island Housing Trust CEO Philippe Jordi stressed the importance of examining the economic impact of investment properties. This is his second or third homebuyer buying a home on the island with the sole purpose of renting it out for short stays.

Unlike owner-occupied rentals, where live-in homeowners can rent guesthouses for additional income, investment properties suffer the most. Given the ease afforded by simply posting a rental through the internet or an app, Jordi said, “It promotes what’s been going on, but it’s far more prevalent.”

Jordi said the first grassroots housing bank initiative had proposed distributing a portion of the lodging tax collected to the town’s affordable housing trust.

Jordi said the goal would be to use some of the surplus funds to get more affordable housing funding from the state. It means that there is Without it, initiatives to have a real impact on housing availability throughout the year are not worth doing.

The short-term rental market is “absolutely having a big impact” on the housing market in general, Jordi said. Speculative investments made for profitable passive income actually hinder the islanders’ chances of securing stable housing throughout the year, he explained. is defeated by

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