Nantucket, Massachusetts Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations in Nantucket, Massachusetts?

Nantucket, a popular vacation destination off the coast of Cape Cod, has been grappling with how to regulate the booming short-term rental market for years. The island's zoning bylaws do not explicitly allow or prohibit short-term rentals, leading to legal battles and heated debates at town meetings. Here's an overview of the current state of short-term rental regulations on Nantucket.

Starting a Short-Term Rental Business in Nantucket

As of March 2024, short-term rentals are in a legal gray area on Nantucket. A Massachusetts Land Court judge ruled that the town's zoning bylaw, which is silent on short-term rentals, cannot be interpreted to allow them as a principal use in residential districts. The judge indicated that short-term rentals could potentially be allowed as an accessory use, but left it to the Nantucket Zoning Board of Appeals to make that determination.

Despite the legal uncertainty, many property owners continue to offer their homes as short-term rentals. In March 2024, the town launched a short-term rental registry to gather data and prepare for future regulations. Short-term rental operators are required to obtain a certificate of registration from the Board of Health and pay an annual fee of $250 per unit. Formal enforcement of the registry requirements will begin on January 1, 2025.

To start a short-term rental business on Nantucket, property owners should:

• Register with the Massachusetts Department of Revenue and obtain a tax ID number
• Register with the Town of Nantucket's short-term rental registry
• Obtain liability insurance with coverage of at least $1 million
• Ensure the property meets all health and safety standards, including occupancy limits of 2 people per bedroom plus 2 additional people
• Provide required information to renters, such as emergency contact numbers and trash disposal instructions

Property owners should be aware that the legal status of short-term rentals could change depending on future town meeting votes and zoning board decisions. A May 2024 vote rejected a proposal to explicitly allow short-term rentals in residential areas, leaving the issue unresolved.

Short-Term Rental Licensing Requirement in Nantucket

As of January 1, 2023, all short-term rental operators in Nantucket are required to obtain a certificate of registration from the Board of Health. The certificate must be renewed annually by November 1.

To apply for a short-term rental certificate of registration, operators must submit the following to the Board of Health:

1. A completed application form (available from the Health Department)
2. An annual fee of $250 per rental unit
3. Ownership information, including the legal form of ownership, whether the unit is professionally managed, mailing address, contact information, and authorization from the owner if not the operator
4. An attestation that all persons with an ownership interest have been notified of the registration application and whether the unit is subject to any deed restrictions on short-term rentals
5. The address and description of the rental unit, including square footage, number of bedrooms, bathrooms, and parking spaces
6. A copy of the current certificate of registration on file with the Massachusetts Department of Revenue
7. Proof of $1 million in liability insurance coverage
8. A parking plan showing the location and number of parking spaces
9. A trash disposal plan
10. Floor plans showing all rooms, exits, and locations of fire extinguishers and fire/smoke/CO alarms
11. Septic system inspection report (if applicable)

The Health Department reviews applications and issues certificates of registration. The process typically takes 2-4 weeks from submission of a complete application.

Operators who fail to register their short-term rental may face fines and penalties. The Town may assess a civil penalty of up to $5,000 for each violation of the short-term rental bylaw or regulations. Each day of operation without a valid certificate of registration constitutes a separate violation. Unregistered short-term rentals are also subject to cease and desist orders from the Health Department.

To avoid penalties and ensure compliance with local regulations, short-term rental operators in Nantucket must obtain a certificate of registration before advertising or renting their property. The annual registration process helps the Town gather data, conduct necessary inspections, and communicate short-term rental requirements to owners and managers.

Required Documents for Nantucket Short-Term Rentals

To register a short-term rental property in Nantucket, operators must submit the following documents to the Board of Health:

Completed Application Form: Available from the Nantucket Health Department. Provides basic information about the property, owner, and operator.

Proof of Ownership: Documentation showing legal ownership of the rental property, such as a deed or property tax bill. Establishes the applicant's right to operate a short-term rental on the premises.

Authorization from Owner (if operator is not the owner): Written permission from the property owner allowing the operator to run a short-term rental. Ensures all owners are aware of and consent to the rental activity.

Current Certificate of Registration with Massachusetts Department of Revenue: Required by state law for all short-term rental operators. Obtained through the MA DOR website and submitted to the town as part of the application.

Liability Insurance Certificate: Proof of liability coverage with a minimum limit of $1 million per claim unless the rental is offered through a platform that provides equal or greater coverage. Protects the operator and town from potential legal claims.

Floor Plans: Detailed layout of the rental property showing all rooms, exits, and locations of safety equipment like fire extinguishers and smoke detectors. Helps verify occupancy limits and fire safety compliance.

Parking Plan: Diagram of available on-site parking spaces for rental guests. Must show that parking will not create safety issues or undue congestion.

Trash Disposal Plan: Description of how trash and recycling will be handled at the property, including pickup schedules and storage locations. Ensures proper waste management to avoid nuisances.

Septic System Inspection Report (if applicable): For properties not connected to the municipal sewer system, a passing inspection report from a licensed septic inspector. Verifies the system is functioning properly to protect public and environmental health.

These documents must be submitted with the short-term rental certificate of registration application to the Nantucket Health Department, along with the annual $250 per unit fee. The Health Department reviews applications for completeness and compliance with all relevant regulations before issuing the certificate of registration, a process that typically takes 2-4 weeks.

Failing to register and provide the required documentation can result in fines of up to $5,000 per violation per day and potential cease and desist orders for the short-term rental operation. Thorough and timely submission of these materials is essential for legally operating a short-term rental in Nantucket.

Nantucket Short-Term Rental Taxes

Short-term rentals on Nantucket are subject to several state and local taxes. As an operator, it's important to understand these taxes, the rates, and how they are collected and remitted. Here's a breakdown of the taxes that apply to short-term rentals in Nantucket:

State Room Occupancy Tax: 5.7%

This tax is imposed by the Commonwealth of Massachusetts on all short-term rentals (stays of 31 days or less). The tax is collected by the operator and remitted to the state Department of Revenue monthly.

Local Room Occupancy Tax: 6.0%

In addition to the state tax, Nantucket imposes a local room occupancy tax of 6% on short-term rentals. This tax is also collected by the operator and remitted to the state, which then distributes the funds to the town.

Cape Cod and Islands Water Protection Fund Tax: 2.75%

This tax applies to short-term rentals in all towns in Barnstable, Dukes, and Nantucket counties. The revenue is used to fund water quality projects in the region. Operators collect this tax along with the state and local taxes.

In total, the tax rate for short-term rentals on Nantucket is 14.45% (5.7% state + 6% local + 2.75% water protection fund). These taxes apply to the total amount of rent, including any cleaning fees, pet fees, or other non-refundable charges.

It's important to note that if you rent your property for 14 days or less per calendar year, you are exempt from collecting and remitting these taxes. However, you must still register with the state and town, carry the required liability insurance, and file a notice with the Department of Revenue stating that you will only rent for 14 days or less.

Possible Deductions and Write-Offs

As a short-term rental operator, you may be able to deduct certain expenses related to your rental business on your income taxes. These could include:

1. Mortgage interest
2. Property taxes
3. Insurance premiums
4. Utilities
5. Cleaning and maintenance costs
6. Repairs and renovations
7. Depreciation of the rental property
8. Advertising and platform fees

It's best to consult with a tax professional to determine which deductions apply to your specific situation and how to properly claim them on your tax returns.

By understanding the tax obligations for short-term rentals on Nantucket and keeping accurate records, you can ensure compliance with state and local regulations while maximizing your rental income.

Massachusetts Wide Short-Term Rental Rules

In addition to Nantucket's local regulations, short-term rental operators on the island must also comply with Massachusetts state laws governing the industry. These statewide rules, which took effect in July 2019, focus primarily on registration, taxation, and insurance requirements for short-term rentals.

Registration and Taxation

Under the Massachusetts short-term rental law, all operators must register with the state's Department of Revenue (DOR) and obtain a certificate of registration. This applies to anyone renting out a property for stays of 31 days or less, regardless of whether they use a short-term rental booking platform like Airbnb or VRBO.

Once registered, operators are responsible for collecting and remitting state and local room occupancy taxes on their short-term rentals. The state tax rate is 5.7%, while local taxes can add up to another 6% (or 6.5% in Boston). Communities that are part of the Cape Cod & Islands Water Protection Fund, which includes Nantucket, can charge an additional 2.75% to fund water quality projects.

Operators must file monthly tax returns and payments with the DOR, unless they rent their property for 14 days or less per year, in which case they are exempt from the tax collection and remittance requirements.

Insurance Mandate

The Massachusetts law also requires short-term rental operators to carry a minimum of $1 million in liability insurance coverage, unless they use a platform that provides equal or greater coverage. This insurance is crucial for protecting hosts from potential property damage or injury claims that may not be covered by standard homeowners' policies.

Exemptions and Restrictions

Certain types of rentals are exempt from the statewide regulations, including properties rented for fewer than 14 days per year, those managed by a real estate broker, and lodging establishments like hotels and B&Bs that are licensed under other state laws.

The law also allows cities and towns to impose additional restrictions on short-term rentals, such as limiting the number of days a property can be rented or requiring special permits or inspections. Nantucket has taken advantage of this local control provision to enact its own set of regulations, as detailed in previous sections.

Enforcement and Penalties

The DOR is responsible for enforcing the registration and tax collection requirements of the state law. Operators who fail to register or pay taxes can face penalties of up to $5,000 per violation, plus interest and late fees.

Local authorities, like the Nantucket Board of Health, are tasked with enforcing any additional regulations adopted at the municipal level, such as occupancy limits, safety standards, and zoning restrictions. Penalties for non-compliance with local rules vary but can include fines, cease and desist orders, and revocation of rental permits.

By understanding and adhering to both state and local short-term rental regulations, Nantucket hosts can ensure they are operating legally and responsibly while contributing to the island's tourism economy. Staying up-to-date on any changes to these laws is essential, as the regulatory landscape continues to evolve in response to community concerns and industry trends.

Does Nantucket Strictly Enforce STR Rules?

Compared to other vacation destinations, Nantucket has taken a relatively strict stance on short-term rentals in recent years. The town has been engaged in a lengthy legal battle over the issue, with a judge recently ruling that using homes primarily as short-term rentals violates residential zoning. This decision opens the door for Nantucket to place tighter restrictions on STRs.

At the May 2024 Town Meeting, Nantucket voters rejected a proposal that would have limited short-term rentals to owner-occupied properties only in residential areas. However, the debate is far from settled. Many residents argue that the proliferation of STRs is exacerbating the island's housing crisis by removing long-term rentals from the market and driving up prices.

With the launch of a short-term rental registry in 2024, Nantucket is poised to start strictly enforcing its STR regulations. The town plans to use the registry data to identify violations and issue fines of up to $5,000 per day starting in 2025. This signals a clear intent to crack down on illegal rentals.

Despite the legal uncertainty, many hosts continue to operate STRs on Nantucket. The high demand from tourists and the potential for significant rental income incentivize owners to take the risk. However, as enforcement ramps up and penalties mount, it will become increasingly difficult for hosts to fly under the radar.

Overall, Nantucket is proving to be less Airbnb-friendly than many other vacation towns. The combination of legal challenges, zoning restrictions, and strict enforcement puts the island on the forefront of the battle against short-term rentals. While the rules are still evolving, it's clear that Nantucket is committed to prioritizing housing for residents over accommodations for tourists. Hosts who continue to operate STRs despite the regulations do so at their own peril.

How to Start a Short-Term Rental Business in Nantucket

Starting a short-term rental business on Nantucket requires careful planning and compliance with state and local regulations. Here are the key steps to get your rental property up and running:

Register with the Massachusetts Department of Revenue: Before listing your property, you must register with the state DOR and obtain a certificate of registration for each rental unit. This allows you to collect and remit the required state and local occupancy taxes.

Register with the Nantucket Board of Health: As of March 2024, all short-term rental operators on Nantucket must register their properties with the town's new rental registry. Submit a completed application, pay the $250 annual fee per unit, and provide all required documentation, including proof of liability insurance, a parking plan, and a trash disposal plan.

Obtain liability insurance: Short-term rental operators must carry a minimum of $1 million in liability coverage, unless they use a platform like Airbnb that provides equal or greater coverage. Consult with your insurance agent to ensure your policy meets the town's requirements.

Prepare your property for guests: Make sure your rental unit is clean, well-maintained, and equipped with all necessary amenities. Provide emergency contact information, exit diagrams, and copies of relevant town bylaws, such as noise and lighting regulations. Arrange for regular cleaning and maintenance between guest stays.

Set your rental rates and policies: Research comparable properties on Nantucket to determine competitive nightly rates for your rental. Decide on your minimum stay requirements, cancellation policy, and house rules regarding occupancy limits, parking, and events like parties or weddings.

List your property on rental platforms: Once your property is registered and ready for guests, create listings on popular vacation rental sites like Airbnb, VRBO, and local real estate agencies. Use high-quality photos and detailed descriptions to showcase your property's unique features and amenities.

Manage bookings and guest communication: Respond promptly to inquiries and booking requests from potential guests. Provide clear check-in instructions and maintain open communication throughout their stay. Consider hiring a professional property manager if you're unable to handle these tasks yourself.

Comply with ongoing regulations: Keep accurate records of your rental income and occupancy, and file all required tax returns with the state DOR. Submit quarterly reports to the Nantucket Board of Health detailing your rental activity. Stay informed about any changes to local zoning laws or rental regulations that may affect your business.

Tips for success:

1. Prioritize guest experience by providing high-quality amenities, clear communication, and prompt assistance with any issues that arise during their stay.
2. Maintain a strong online presence with attractive listings, positive reviews, and active social media engagement.
3. Build relationships with local service providers, such as cleaners, handymen, and property managers, to ensure smooth operations and quick resolution of any problems.
4. Stay involved in the local community and stay up-to-date on any proposed changes to short-term rental regulations that could impact your business.

By following these steps and remaining compliant with all state and local requirements, you can successfully launch and operate a short-term rental business on Nantucket. While the regulatory landscape continues to evolve, the demand for vacation accommodations remains strong, offering opportunities for property owners to generate rental income while providing memorable experiences for visitors to the island.

Who to Contact in Nantucket about Short-Term Rental Regulations and Zoning?

If you have questions or concerns about short-term rental regulations and zoning in Nantucket, here are the key contacts and resources:

Nantucket Health Department

1. Physical Address: 131 Pleasant Street, Nantucket, MA 02554
2. Phone: (508) 228-7200 ext. 7009
3. Email: health@nantucket-ma.gov
4. Website: https://www.nantucket-ma.gov/225/Board-of-Health

The Health Department administers the short-term rental registration program and enforces health and safety regulations. Contact them for questions about the registration process, fees, inspections, and complaints.

Nantucket Planning & Land Use Services

1. Physical Address: 2 Fairgrounds Road, Nantucket, MA 02554
2. Phone: (508) 325-7587
3. Email: planning@nantucket-ma.gov
4. Website: https://www.nantucket-ma.gov/288/Zoning-Board-of-Appeals

The Planning & Land Use Services Department oversees zoning and land use regulations on the island. Contact them for questions about allowed uses in residential districts, zoning enforcement, and appeals.

Nantucket Town Administration

1. Address: Town & County Building, 16 Broad Street, Nantucket, MA 02554
2. Phone: (508) 228-7255
3. Website: https://nantucket-ma.gov/

For general questions or concerns about short-term rentals and their impact on the community, contact the Town Administration offices. They can direct you to the appropriate departments or committees.

Short-Term Rental Operator Resources

1. Nantucket Short-Term Rental Website: https://nantucket-ma.gov/2673/Short-term-Rentals
2. Operator FAQ: https://nantucket-ma.gov/Faq.aspx?QID=415
3. GovOS Support: blt.str.support@govos.com or (888) 751-1911

Visit the town's dedicated short-term rental website for the latest information on the registration process, regulations, and upcoming deadlines. The FAQ page addresses common questions from operators. For technical support with the GovOS registration system, contact their support team directly.

Community Groups and Forums

1. Nantucket Together: https://www.nantuckettogether.com/
2. Nantucket Civic League: https://nantucketcivicleague.org/
3. Nantucket Short-Term Rental Alliance: https://www.nstraliance.org/
4. Nantucket Reddit Forum: https://www.reddit.com/r/Nantucket/

Connect with other short-term rental operators, residents, and community organizations to stay informed about the ongoing debate over short-term rentals on the island. These groups offer opportunities to share experiences, ask questions, and advocate for fair and effective regulations.

By staying in touch with local officials and engaged with the community, short-term rental operators can navigate the evolving regulatory landscape on Nantucket and contribute to a balanced approach that benefits both residents and visitors alike.

What Do Airbnb Hosts in Nantucket on Reddit and Bigger Pockets Think about Local Regulations?

Nantucket's short-term rental regulations have been a hot topic of discussion among hosts and property owners on online forums like Reddit and Bigger Pockets. Here are some key insights and experiences shared by Nantucket hosts:

Reddit - r/Nantucket

In a thread about the recent court ruling against the town's attempt to restrict short-term rentals, many hosts expressed frustration with the ongoing legal battles. One commenter predicted, "The town will just codify short-term rentals in their zoning bylaws." Others hoped the decision would stick, with one host stating, "The local residents should be able to enjoy their homes."

Another post about the May 2024 Town Meeting vote rejecting limits on short-term rentals drew mixed reactions. Some hosts sympathized with residents concerned about housing availability, while others argued that vacation rentals are vital to Nantucket's economy. One host shared, "I rent out my family's old house because we can't afford to live on the island full-time. This rule would force us to sell unless we can pay the expensive cost of living there."

Bigger Pockets Forum

On the Bigger Pockets Real Estate Investing Forum, a Nantucket property owner started a thread asking for advice on navigating the island's evolving short-term rental landscape. Several hosts chimed in with their experiences:

"I've been renting my Nantucket cottage on Airbnb for years, but it's getting harder to keep up with all the new rules and registration requirements. I'm considering selling, but I hate to give up the rental income."

"The uncertainty around short-term rentals is definitely a concern for investors on Nantucket. I'm holding off on buying any new properties until there's more clarity on what will be allowed."

"I live off-island but rent my Nantucket home during the summer. The new owner-occupancy proposal would be devastating for me. I can't afford to live there full-time, but I don't want to lose my family's vacation spot."

Overall, the online discussions reveal a mix of frustration, uncertainty, and resignation among Nantucket short-term rental hosts. Many feel caught between the island's housing crunch and their own financial realities. As one host summed it up on Reddit, "The odds are stacked against us, but I'm happy to finally see some realization of the problem, albeit about 20 years too late."

As the debate over short-term rentals continues to play out in town meetings and courtrooms, Nantucket hosts are anxiously watching to see how the regulations will impact their properties and livelihoods in the years to come. For now, most are focused on complying with the current registration requirements and hoping for a balanced solution that preserves both housing stability and the island's vital tourism economy.

Disclaimer: While we here at BNBCalc strive to keep all of our city regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each city and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.