What Every Airbnb Host Should Know About North Shore Property Taxes & STR Compliance
What Every Airbnb Host Should Know About North Shore Property Taxes & STR Compliance
If you’re an Airbnb host in Gloucester, Rockport, Manchester-by-the-Sea, or anywhere along the Massachusetts coast, managing short-term rentals (STRs) isn’t only about good reviews and competitive pricing—it’s also about staying compliant and understanding your tax responsibilities. I talk to owners who are unaware of these regulations and rules and have been running their Airbnb property for years. Don’t be that person! Here’s what every North Shore Airbnb host needs to know to avoid fines, stay legal, and maximize your rental income.
Massachusetts Short-Term Rental Laws
As of July 1, 2019, short-term rentals, Airbnbs and VRBO listings in Massachusetts are subject to a state law that treats STRs similarly to hotels and inns. If you rent out your property (or even just a room) for fewer than 31 consecutive days, this law applies to you, even if it’s just occasionally.
You’re responsible for:
Registering with the MA Department of Revenue and obtaining and displaying a current MA Room Occupancy Excise Registration Certificate
Collecting and remitting local and state occupancy taxes
State & Local Occupancy Tax Categories
Depending on the location of your property, you could be responsible for the following tax categories:
State Tax
Local Option Tax
Convention Center Fund
Water Protection Fund
Community Impact Fee
Tourism Fee
State tax: 5.7%
Local tax: Typically 6.0% (varies slightly by town)
Cape Cod & Islands Water Protection Fund: 2.75% (does not apply to North Shore towns)
Community Impact Fee: Up to 3% (if applicable—depends on local ordinance)
If you would like to book a call with someone from our team to see what taxes your property needs to pay, click Here. We take care of all tax compliance for our properties.
Total Tax in Most North Shore Towns: ~11.7%
Airbnb collects and remits this for you—but only if you're using their platform. If you take direct bookings or list on VRBO without enabling tax collection, you’re responsible for filing and paying it yourself. And if you have read other blogs on this site you know the importance of marketing your property on a direct channel, VRBO, Booking.com, and Expedia.com.
You Must Register Your Property with the State
This step is easy to overlook, but it’s legally required. All STRs must be registered with the Massachusetts Department of Revenue and issued a registration number, which should appear on your listing.
You can register here: Mass.gov STR Portal
Not registering could result in penalties, and Airbnb or VRBO may even remove your listing if you’re flagged.
Local Rules Are Changing—Fast
Beyond state law, many North Shore towns are creating their own rules. Here's a quick summary of where things stand in some key towns:
Gloucester
Registration with the city is required (separate from state)
Certain zoning restrictions may apply
As of 2024, new limits are in place on the number of STRs per owner in residential areas - you can check out our blog on the new Gloucester regulations Here
Rockport
STRs must be owner-occupied or owner-adjacent in most zones
Registration and inspections may be required
Manchester-by-the-Sea
STRs are limited and must comply with local zoning
Some areas require special permits for rentals under 30 days
Always check your town’s website or call the planning department before listing a property.
Don’t Forget About Property Taxes
Running a short-term rental doesn’t usually change your property tax classification if the rental is occasional or part-time. However:
If your property is a full-time investment, the assessor may reclassify it as commercial, raising your tax rate.
Towns are increasingly scrutinizing Airbnb & VRBO properties - especially if there are frequent guest complaints, visible signage, or dedicated management.
Also, income from your rental is taxable at both the state and federal levels. You should:
Report earnings on your Schedule E
Keep track of eligible deductions like cleaning fees, supplies, and repairs
Talk to a tax advisor specifically about your tax returns and income made from your Airbnb income
All Wilkuma clients will have a 1099 issued at the end of the year showing the income and expenses for their rental property. AND YES, OUR MANAGEMENT FEE IS TAX DEDUCTIBLE!
Compliance = Protection + Peace of Mind
More towns are adding local STR ordinances, registration programs, and inspection protocols for Airbnb and VRBO properties. Operating legally helps you:
Avoid steep fines (some towns charge up to $300/day for noncompliance)
Protect your property and booking income
Build trust with the community
Final Thought
Being a responsible Airbnb host on the North Shore isn’t just about hospitality—it’s about treating your rental like a business. Register your rental, stay current with local laws, collect taxes properly, and keep clean records. Doing it right not only keeps you compliant—it protects your investment and builds long-term value.
Need help navigating STR compliance or managing your Airbnb?
At Wilkuma, we help Airbnb & VRBO hosts from Gloucester to Bourne manage every part of their short-term rental—from marketing to maintenance to keeping up with local regulations.
👉 Let’s talk about how we can take the stress out of STR compliance.
