Short-Term Rentals in Massachusetts: The Registration, Insurance, and Tax Rules Owners Actually Have to Follow
Massachusetts has regulated short-term rentals statewide since Chapter 337 of the Acts of 2018 took effect on January 1, 2019 — a law usually referred to by its short title, "An Act Regulating and Insuring Short-Term Rentals." A short-term rental is defined as renting a room, apartment, house, or other unit for 31 consecutive days or fewer (hotels, motels, and licensed bed-and-breakfasts are handled separately). If that describes what you're renting out, three things apply regardless of which town you're in.
Do you have to register with the state?
Yes. Every operator of a short-term rental must register annually with the Massachusetts Department of Revenue through MassTaxConnect. This applies whether you rent out a room in your own home, a whole property, or multiple units, and it's separate from — not a substitute for — any local registration your city or town may also require.
What insurance does the law require?
A minimum of $1,000,000 in liability coverage per short-term rental, covering bodily injury and property damage arising from the rental, unless the rental is offered exclusively through a hosting platform (such as Airbnb) that already maintains equal or greater coverage on your behalf. If you rent through multiple channels or independently, it's worth confirming directly with your insurer or platform that this minimum is actually met — the assumption that "the platform covers it" isn't automatically true depending on how you're listing.
What tax do you actually owe?
A room occupancy excise applies at the state level, and municipalities have the option to add their own local excise on top of it. There is a meaningful exemption: rentals of a given property for fewer than 14 days per calendar year are not subject to the excise. Note that this exemption applies to the tax specifically — you still have to register the property and carry the required insurance even if you rent so rarely that no excise ends up owed.
Does your town add its own rules on top of this?
Often, yes, and this is where the real variation lives. Cities and towns can adopt their own registration requirements, caps, or zoning restrictions on short-term rentals — some municipalities restrict them to owner-occupied properties, cap the number of days per year, or require a local permit in addition to the state registration. What's allowed in one town may not be in the next, so checking your specific municipality's rules is a separate, necessary step from complying with the state law.
Does this affect buying an investment property specifically for short-term rental?
Significantly. Before assuming a property will work as a short-term rental, check local zoning and any municipal short-term rental bylaw — a property that looks like a straightforward investment on paper can turn out to be restricted to long-term tenancies only, or capped in a way that changes the economics considerably. This is worth confirming before you're under agreement, not after closing, since it can change what the property is actually worth to you. See our guide to investing in multi-family property in Massachusetts for the broader picture on investment purchases.