How Massachusetts Short-Term Rental Taxes Work

Short-term rental taxes can be confusing because the process is different depending on who collects the guest’s payment.

For properties managed by Capehost, the main rule is:

Airbnb collects and remits Massachusetts occupancy taxes. For Vrbo, direct bookings, and other reservations processed through Capehost, Capehost collects the taxes from the guest and passes the tax funds to the owner. The owner must then file and remit those taxes through MassTaxConnect.

This article explains how that process works, why Vrbo does not remit taxes for Capehost reservations, and what property owners need to do each month.

Quick summary

The easiest way to remember this is:

Airbnb remits the taxes. Capehost-processed reservations pass the taxes to the owner for MassTaxConnect filing.

The two ways taxes are handled

Every reservation follows one of two tax flows.

Platform-remitted taxes

The booking platform:

1. Calculates the applicable occupancy taxes.
2. Charges the taxes to the guest.
3. Collects the guest’s payment.
4. Sends the taxes directly to the government (local and and state).
5. Excludes those tax funds from the owner payout.

This is how Airbnb reservations generally work.

Owner-remitted taxes

Capehost:

1. Calculates the applicable occupancy taxes.
2. Charges the taxes to the guest.
3. Processes the guest’s payment.
4. Passes the collected tax funds to the property owner.
5. Reports the tax amount in the reservation and payout records.

The property owner must then report and remit those taxes through MassTaxConnect.

This is how Capehost’s Vrbo, direct, manual, and owner-referred reservations work.

Airbnb reservations

For Airbnb reservations, Airbnb collects and remits the applicable Massachusetts occupancy taxes.

The guest pays the taxes to Airbnb as part of the reservation total. Airbnb keeps those funds separate from the host payout and sends them to the appropriate tax authorities.

Is Airbnb tax included in the owner payout?

No.

Taxes collected and remitted by Airbnb are not passed to Capehost or the property owner. The owner does not need to send those same taxes to Massachusetts again.

What does the owner need to do?

Even when Airbnb handles all tax collection and remittance, the owner should still:

• Keep the property registered with the Massachusetts Department of Revenue.
• Maintain access to MassTaxConnect.
• Keep Airbnb reservation and tax records.
• Review every return shown as due in MassTaxConnect.
• File zero returns when required.
• Keep the property’s seasonal filing status accurate.

Why Vrbo does not remit taxes for Capehost reservations

Many property owners expect Vrbo to handle taxes the same way as Airbnb.

Vrbo may collect and remit taxes when an owner uses Vrbo’s standard payment system. However, Capehost uses an integrated property-management system and processes the guest’s payment outside Vrbo’s standard payment flow.

Under this setup, Capehost becomes the Merchant of Record.

The Merchant of Record is the business responsible for processing the payment and handling the related tax collection.

Vrbo’s own documentation states that after an integrated property manager becomes the Merchant of Record, Vrbo no longer collects or remits taxes for those reservations. The integrated property manager becomes responsible for collecting the taxes. (vrbo)

How a Capehost Vrbo reservation works

For a Vrbo reservation managed by Capehost:

1. The guest finds and books the property through Vrbo.
2. Vrbo sends the reservation information to Capehost’s integrated system.
3. Capehost processes the guest’s credit card payment.
4. Capehost calculates and collects the applicable Massachusetts occupancy taxes.
5. The collected tax funds are passed through to the property owner.
6. The owner reports and remits the taxes through MassTaxConnect.

Vrbo is the booking marketplace, but it is not the payment processor or tax-remitting party for these reservations.

Is Vrbo tax included in the owner payout?

Yes.

The taxes collected from the guest are included in the reservation’s financial flow and passed through to the owner. Those funds are not additional rental income. They are tax funds that the owner must later remit through MassTaxConnect.

This is why a Vrbo payout may look higher than an Airbnb payout. The Airbnb payout does not include taxes because Airbnb already remitted them. The Capehost Vrbo payout includes taxes that still need to be paid by the owner.

Direct bookings

Direct reservations follow the same tax process as Capehost’s integrated Vrbo reservations.

For a direct booking:

1. The guest books directly through Capehost.
2. Capehost calculates the applicable occupancy taxes.
3. Capehost processes the guest’s payment.
4. Capehost collects the taxes from the guest.
5. The tax funds are passed through to the property owner.
6. The owner reports and remits the taxes through MassTaxConnect.

Is direct-booking tax included in the owner payout?

Yes.

The collected tax is passed through as part of the reservation’s financial activity. The tax portion is not rental revenue. The owner should keep it available for the MassTaxConnect payment.

Manual and owner-referred reservations

Manual reservations and owner referrals processed through Capehost follow the same process as direct bookings. Capehost collects the guest’s payment and applicable taxes. The taxes are then passed through to the owner. The owner is responsible for reporting and remitting those taxes through MassTaxConnect.

Is tax included in the payout?

It depends on who handled the tax.

Airbnb

Airbnb collects and remits the tax. The tax is not included in the owner payout.

Vrbo through Capehost

Capehost collects the tax and passes it to the owner. The owner must remit it through MassTaxConnect.

Direct, manual, and owner-referred reservations

Capehost collects the tax and passes it to the owner. The owner must remit it through MassTaxConnect.

Example

Assume a Vrbo or direct reservation includes:

Capehost collects $2,289 from the guest.

The $289 in taxes is passed through as part of the reservation’s financial flow. It is not additional rental income.

The owner must report and remit the $289 through MassTaxConnect.

For the same reservation on Airbnb, Airbnb would collect and remit the $289 directly. It would not be included in the owner payout.

Why Vrbo and direct payouts may look higher

Owners sometimes compare Airbnb and Vrbo payouts and conclude that the Vrbo reservation produced more income.

That may not be correct.

The Vrbo or direct payout may include occupancy tax funds that still need to be sent to Massachusetts.

For example:

• Airbnb payout excludes taxes remitted by Airbnb.
• Capehost Vrbo payout includes taxes that the owner must remit.
• Direct-booking payout includes taxes that the owner must remit.

Owners should subtract the tax amount before comparing actual revenue between booking channels.

For a detailed payout example, including commission, platform fees, processing fees, cleaning fees, and taxes, see:

How Commission, Taxes, and Payout Work

Capehost’s existing payout example shows that Airbnb taxes are removed before payout, while Vrbo and direct-booking tax funds remain in the owner’s financial flow and must later be remitted. (Capehost)

MassTaxConnect registration

Every Massachusetts short-term rental property should be properly registered through MassTaxConnect.

This remains important even when all reservations are booked through Airbnb and Airbnb handles all tax remittance.

Owners should confirm that:

• Each rental property is registered.
• The property address is correct.
• The operator information is current.
• The Room Occupancy Consolidated account is active.
• The registration number appears on applicable listings.
• The filing schedule is correct.
• Seasonal status is set correctly when applicable.

Capehost does not control the owner’s MassTaxConnect account. The owner is responsible for keeping the registration and filing settings accurate.

Do I need to file when Airbnb remits all the taxes?

Owners should file every return that MassTaxConnect shows as due.

This may include months when:

• All reservations were through Airbnb.
• Airbnb collected and remitted all taxes.
• There were no Vrbo or direct reservations.
• No tax funds were passed through by Capehost.
• There was no rental activity.

In those cases, the owner may need to file a return showing zero owner-remitted tax.

An owner should not report Airbnb taxes as taxes still owed because Airbnb already remitted them.

The owner should follow the fields and instructions shown in MassTaxConnect or confirm the correct filing process with the Massachusetts Department of Revenue.

What happens in a month with only Airbnb reservations?

Assume the property had three Airbnb reservations and no other activity.

Airbnb collected and remitted the taxes for all three reservations.

The owner does not need to pay those taxes again.

However, when MassTaxConnect shows a return as due, the owner should still submit the required filing, generally showing zero tax collected directly by the owner.

What happens in a month with Airbnb and Vrbo reservations?

Assume the owner had:

• $700 in taxes collected and remitted by Airbnb.
• $300 in taxes collected by Capehost from Vrbo guests.
• $300 in tax funds passed through to the owner.

The owner should not remit the $700 again.

The owner should report and remit the $300 associated with the Capehost-processed Vrbo reservations.

The owner should keep records showing that Airbnb handled the remaining $700.

What happens in a month with no reservations?

When MassTaxConnect shows a return as due, the owner should file it even when the property had no reservations and no tax is due.

Ignoring a return may result in notices or penalties even when the amount owed is zero.

Seasonal properties

Many Cape Cod properties operate only during part of the year.

Owners may be able to change their MassTaxConnect registration to seasonal status. This can prevent MassTaxConnect from creating returns during the property’s normal closed season.

For example, an owner who rents only from May through October may be able to avoid monthly filings during the winter.

Owners should contact the Massachusetts Department of Revenue or follow the MassTaxConnect instructions to confirm:

• Whether the property qualifies for seasonal filing.
• Which months should be active.
• Which months should be inactive.
• When the seasonal designation takes effect.
• Whether any existing returns still need to be filed.

Seasonal status does not remove the filing and payment requirements during the active rental season.

Filing deadlines

Massachusetts room occupancy filings are generally completed monthly.

Owners should follow the exact due date displayed in MassTaxConnect. In many cases, the return is due by the 30th day following the reporting month.

For example:

• May activity is generally due by June 30.
• July activity is generally due by August 30.
• August activity is generally due by September 30.

Owners should complete the filing several days early in case there is a login, payment, or account problem.

What should the owner report?

For Capehost-managed properties, the owner generally reports taxable reservations where Capehost processed the guest’s payment and passed the taxes to the owner.

This includes:

• Vrbo reservations processed through Capehost.
• Direct Capehost reservations.
• Manual reservations processed through Capehost.
• Owner-referred reservations processed through Capehost.

The owner generally does not remit Airbnb taxes because Airbnb already handled them.

How to avoid paying the tax twice

Before submitting the monthly return, separate reservations into two groups.

Airbnb remitted

Airbnb collected and remitted the tax. Do not pay the tax again.

Owner must remit

Capehost collected the tax and passed it to the owner.

This includes:

• Vrbo reservations through Capehost.
• Direct bookings (including owner referrals processed through Capehost)

These taxes must be reported and remitted through MassTaxConnect.

Monthly checklist

At the end of each month:

1. Review all reservations for the reporting period.
2. Separate Airbnb reservations from Capehost-processed reservations.
3. Confirm the taxes Airbnb collected and remitted.
4. Review the Capehost owner statement.
5. Identify tax funds passed through from Vrbo, direct, manual, and owner-referred bookings.
6. Log in to MassTaxConnect.
7. Review the return shown as due.
8. Report the owner-remitted taxable activity.
9. Do not include Airbnb taxes as taxes still owed.
10. File a zero return when required.
11. Submit any payment due.
12. Save the filing and payment confirmations.

Records owners should keep

Owners should retain:

• Capehost owner statements.
• Reservation financial records.
• Airbnb tax reports.
• Vrbo reservation records.
• Direct-booking payment records.
• Refund and cancellation records.
• MassTaxConnect returns.
• Payment confirmations.
• Property registration certificates.
• Communications with the Massachusetts Department of Revenue.

These records help explain which taxes were remitted by Airbnb and which taxes were passed to the owner.

Refunds and cancellations

Refunds may change the amount of taxable rent and tax that should be reported.

The correct treatment may depend on:

• When the guest payment was collected.
• When the refund was issued.
• Whether the refund was full or partial.
• Whether the tax was already reported.
• Whether the refund happened in the same filing period.
• Whether a previously filed return needs to be amended.

Owners should review their Capehost statement and payment records before filing.

For more complex refunds or changes to a previously filed period, the owner should consult the Massachusetts Department of Revenue or a qualified tax professional.

What Capehost handles

Capehost:

• Configures the applicable tax rates in its booking system.
• Calculates taxes for Capehost-processed reservations.
• Charges taxes to Vrbo, direct, manual, and owner-referred guests.
• Processes those guest payments.
• Passes the collected tax funds to the owner.
• Provides reservation and payout records.
• Identifies the booking channel for each reservation.
• Shows the tax amount collected through Capehost’s systems.

What the owner handles

The property owner remains responsible for:

• Registering the property with Massachusetts DOR.
• Maintaining the MassTaxConnect account.
• Keeping property information accurate.
• Requesting seasonal filing status when appropriate.
• Reviewing returns shown as due.
• Filing required returns.
• Filing zero returns when required.
• Reporting Capehost-processed reservations.
• Paying taxes passed through by Capehost.
• Keeping filing and payment records.
• Getting professional tax advice when needed.

Frequently asked questions

Does Airbnb remit Massachusetts occupancy taxes?

Yes. For Airbnb reservations, Airbnb generally collects the taxes from the guest and remits them directly.

The taxes are not passed to the owner.

Why does Vrbo not remit taxes for my Capehost property?

Capehost uses an integrated property-management system and processes the guest payment.

Capehost becomes the Merchant of Record. Under Vrbo’s integrated-account rules, Vrbo no longer collects or remits the tax. (vrbo)

Is Vrbo tax included in my owner funds?

Yes. Capehost collects the tax from the guest and passes it through to the owner. The owner must remit it through MassTaxConnect.

Does Capehost pay the tax for the owner?

No. Capehost calculates and collects the tax from the guest, but the tax funds are passed to the owner. The owner is responsible for the MassTaxConnect filing and payment.

Are direct-booking taxes included in my payout?

Yes. Direct-booking taxes are collected by Capehost and passed to the owner for remittance.

Why does my Vrbo payout look higher than my Airbnb payout?

The Vrbo payout includes tax funds that the owner still needs to remit. The Airbnb payout excludes taxes because Airbnb already sent them to the government.

Do I need to file when I owe no tax?

When MassTaxConnect shows a return as due, the owner should file it even when no payment is required. This may happen in a month with only Airbnb reservations or no reservations.

Can I avoid filing during the winter?

A property that operates seasonally may qualify for seasonal filing status.

The owner should update the MassTaxConnect account or contact the Massachusetts Department of Revenue to confirm the approved active months.

Does Capehost file MassTaxConnect returns for owners?

No, unless there is a separate written agreement stating otherwise. Capehost provides the reservation and tax information. The property owner or the owner’s accountant remains responsible for filing the return and submitting the payment.

Are occupancy taxes the same as income taxes?

No.

Occupancy taxes are collected from guests and paid to the government. Income taxes are based on the owner’s taxable income and expenses. This article covers only short-term rental occupancy taxes.

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Important notice

This article provides general operational information for Capehost property owners. It is not legal, accounting, or tax advice.

Tax rates, platform processes, and Massachusetts filing requirements may change. Owners should review their MassTaxConnect accounts and consult the Massachusetts Department of Revenue or a qualified tax professional regarding their specific situation.

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