The recent passage of a tax on short-term rentals has kindled confusion among homeowners and realtors who fear it could eventually impact the Island’s robust seasonal economy.

At a recent listening session concerning the tax in Edgartown, realtor Lisa Lucier told Edgartown selectmen that her agency, Anchor Realty, deals with 150 homeowners throughout the Island, many of whom have started to feel the repercussions of the tax.

“It is definitely affecting renters,” Ms. Lucier said. “I have had a lot of people call and complain about it, and one person call and say they weren’t going to do the rental because they didn’t want to pay the tax . . . they feel like it is one more thing they’ve got to pay.”

Enacted during an 11th-hour legislative session and signed into law by Gov. Charlie Baker in December of 2018, the tax expands the 5.7 per cent state hotel and rooms tax to include short-term rentals. Towns also have the choice of tacking on a local occupancy tax of up to six per cent — meaning that in Oak Bluffs and Tisbury short-term renters will pay an 11.7 per cent tax to the state. In Edgartown, Chilmark and Aquinnah, the number is 9.7 per cent. West Tisbury has not voted to enact a local room occupancy tax.

The law takes effect July 1 and defines a short-term rental as any occupied property that is rented for less than 31 days. Any property that is rented for less than 14 days total during a calendar year is exempt from the tax.

“The majority of our business is short-term vacation rentals,” said Anne Mayhew, broker owner at Sandpiper Rentals. Sandpiper represents upwards of 650 homeowners on the Island, most of whom rent seasonally during the summer in Oak Bluffs and Edgartown. Ms. Mayhew said she hasn’t received any pushback from renters about the tax - and that summer bookings are strong - but has gotten calls from confused homeowners.

“Overall, it’s had more of an impact on our owners, trying to figure out what needs to be done, what they’re obligated for, and trying to determine whether it’s going to impact their property’s availability,” Ms. Mayhew said.

Executive director of the commission, Adam Turner, made clear at the listening session last week that the seasonal economies of the Cape and Islands were facing the unintended fallout from a tax originally geared toward curtailing Boston’s booming Airbnb rental industry.

“I’ve been getting a lot of calls, and one of the things I want to talk about is that this bill was not really directed at us,” Mr. Turner said. “This was a problem in Boston. The Boston Chamber of Commerce felt they needed to even the playing field, so they expanded the tax base to include short-term rentals. This was unintended for us. But it is an opportunity.”

According to data from the Martha’s Vineyard Commission, Edgartown has approximately 3,500 seasonal units. Assuming half of those properties are used for seasonal short-term rentals, the commission estimates the tax would bring in over $2 million annually in revenue for the town. Those numbers are comparable in Oak Bluffs and Tisbury. Up-Island, in Chilmark and Aquinnah, the commission estimates yearly revenue at $740,000 and $180,000 respectively.

For those who rely on the seasonal rental economy, however, the tax windfall is of little importance when a portion of their livelihood is at stake. Diane Drake has rented her home in Edgartown during the summer since 2010, and is worried about how her repeat tenants will react with what is effectively a 9.7 per cent price hike.

“We think of this house as our retirement,” Ms. Drake said. “Tenants who can’t afford to pay the 9.7 per cent will look elsewhere.”

Ms. Lucier from Anchor Realty seconded that fear.

“No matter how you want to slice it, the rental rates have gone up. And they’ve gone up a pretty good amount,” Ms. Lucier said. Reached by phone, Ms. Lucier added that homeowners whom she represents have collected taxes for their rental periods that range from $350 on modest homes to $1,750 on a particularly pricey two-week rental.

“People don’t want big brother all over you,” she said. “We don’t know what it is going to do to our industry, but I don’t think they investigated it very much.”

Ms. Lucier said July rentals have looked slow relative to historic rates booking rates at this time in the year.

“I see a lot of availability in July,” Ms. Lucier said. “I don’t know if July is slow because now when they book they are paying an extra 11.7 percent, but it’s slow. To me it means I think there is a difference, just because of the homeowners who are calling us and saying we have a lot of space open. And we can’t survive if we shrink our rental season down to four weeks.”

Confusion from the rapid enactment of the bill has also caused headaches for realtors and homeowners alike. Ms. Mayhew from Sandpiper Rentals said she has received dozens of calls asking about the logistics of the tax from the homeowners’ perspective.

“The fact that the bill came into effect so quickly, there were a lot of questions in that regard,” Ms. Mayhew said. “And the language was difficult to interpret, and we didn’t have any clarification from DOR for many weeks. And it is still not clarified. So I don’t know what’s going to happen. It’s a lot to take in.”

Ms. Mayhew said while her business hasn’t taken a noticeable hit from the tax, she thought it might have an effect on repeat renters who come back for the 2020 rental season. Most of her 2019 clients had booked their rentals before Jan. 1, exempting them from the tax this summer season. According to Mr. Turner, renters will be expected to collect the excise tax and then remit it to the state.

While many real estate agents service renters who can afford — or may not even notice — a 10 per cent tax on their rental, Ms. Drake said her tenants are generally families of modest means looking for reasonable weekly vacations. She decided not to raise her rental prices this year because of the tax.

“For people renting my property, paying that tax is a much bigger deal,” she said.

Ms. Drake said she didn’t protest the bill or call her representatives because she saw it as an opportunity to help with the affordable housing crisis on the Island, thinking the tax may incentivize more landlords to rent properties year-round. Mark Hess, chairman of the Edgartown Affordable Housing Committee, said that was a possibility but that the jury’s still out on whether it will help the problem.

“It’s something we’re thinking about,” Mr. Hess said at the session last week. “But we just don’t know yet.”

Other Edgartown residents felt like the tax didn’t go far enough to solve the affordable housing issue. Peter Look believed that the increased regulations associated with the tax, including registration, $1 million liability insurance, and property inspections, would actually hurt prospects for affordable housing.

“It will move people underground,” he said at the listening session. For him, short-term rentals, not the tax, were the root of the problem. “I think I’ll do a petition next year that will ban short-term rentals in Edgartown,” he added.

Until then, homeowners and realtors are anxiously looking forward to what the summer brings.

“We start re-booking for 2020 in July in August,” Ms. Mayhew said. “Next year will be the real test.”