Panel debates long-term-rental rule and classification of multifamily buildings under tax bill

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.