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Panel debates long-term-rental rule and classification of multifamily buildings under tax bill
Summary
Lawmakers and Tax staff debated whether to define long-term rentals by repeated 30-day stays (landlord-certificate approach) or require a longer occupancy threshold, and discussed treating buildings with five or more units as commercial apartment buildings for classification and administrative ease.
Committee members, legislative counsel and Department of Taxes staff spent a lengthy portion of the hearing hashing through competing approaches to defining "long-term rental" and how to classify multifamily buildings for tax purposes.
One option discussed mirrored the transfer-tax landlord-certificate approach and used a 30-day threshold (aligned with landlord-tenant law and transfer-tax precedents) plus a bona fide landlord-tenant relationship to identify long-term rentals. Another approach from Ways and Means used a multi-part "and" test that would effectively require a dwelling unit to be rented for six calendar months (not necessarily consecutive) to qualify as a long-term rental.
Kirby Keaton and Rebecca (Deputy Commissioner, Department of Taxes) warned of administrative burdens if landlords of large apartment buildings must fill out a per-unit dwelling-use attestation listing each unit's classification. Tax staff suggested using an existing grand-list category (multifamily/commercial apartment buildings defined as five or more units) to reduce municipal workload, but members and counsel flagged condo ownership and ownership-structure edge cases that complicate a bright-line five-unit rule.
The committee also discussed where to draw the line between regulated lodging establishments (hotels and licensed bed-and-breakfasts) and unregulated short-term rentals; counsel said licensed lodging establishments should be treated as commercial for tax-classification purposes and not as private short-term rentals.
No final statutory text was adopted at this meeting; members asked staff, Tax and housing stakeholders to return with clarifying language, form designs, and examples to avoid creating loopholes or overwhelming municipal systems.
