Gloucester Adopts Maximum Short-term Rental Community Impact Fee

With a unanimous vote of the City Council, Gloucester has adopted a Community Impact Fee for Short-Term Rentals. This adds 3% onto the already 6% Gloucester collects from local lodging excise taxes. The city says it will use the funds raised from the Community Impact Fee exclusively towards affordable housing initiatives and projects.

Jim Destino, the City’s Chief Administrative Officer, was quoted as saying: “We value the revenue and feel that it levels the playing field with the already established lodging establishments in the City.’”

This new fee stems from the framework built by An Act Regulating and Insuring Short-Term Rentals, which was opposed by the Massachusetts Association of REALTORS®, and is one of the first around the state. In accordance with the new law a city of town can “impose upon an operator a community impact fee of not more than 3 per cent of the total amount of rent for each transfer of occupancy of a professionally managed unit that is located within that city of town."

REALTORS® should be aware of and educated on the taxes that need to be collected and remitted when working with short-term rental properties.