Eastham Vacation Rental Investment: Chapter 116's Ownership Caps and the Tax Stack

Chapter 116, "Rentals, Short-Term": Effective January 1, 2025

Eastham's short-term rental bylaw, Chapter 116, is a genuinely new, dated ordinance -- it took effect January 1, 2025, not decades ago. It defines a short-term rental as a rental of a whole or partial dwelling for 30 consecutive days or fewer, and it requires registration with the Board of Health in addition to the state-level registration every Massachusetts STR operator needs through MassTaxConnect, the Department of Revenue's system. One detail worth flagging for anyone who uses a property manager: the bylaw requires registration in the actual owner's name, not the management company's -- a property manager running day-to-day operations doesn't change whose name has to be on file with the town.

Ownership Caps More Restrictive Than Dennis: Two Units, No Corporations

This is the section of Chapter 116 that sets Eastham apart from most other Cape towns this site has covered. An owner may register at most two dwelling units as short-term rentals, with an exception for cottage colonies held under single ownership. Corporations are barred from owning STR units outright -- not fined for it, barred. LLCs, trusts, and S-corporations can qualify, but only if every member of the entity is a natural person, which rules out corporate-owned LLC structures that are common elsewhere. STRs are also prohibited on income- or affordability-restricted units. There's a grandfathering provision for entities that already held certificates for three or more units as of the January 1, 2025 effective date -- those may keep renewing until the property transfers, but the cap applies to everyone else going forward. If you're evaluating Eastham as part of a multi-unit STR portfolio strategy, this two-unit cap (versus a less restrictive structure in Dennis) is a real constraint to underwrite around, not a technicality.

Penalties escalate: noncriminal fines run $100 for a first violation, $200 for a second, and $300 for a third or subsequent violation, with civil penalties reaching up to $5,000 per violation on top of that. The Board of Health can suspend or revoke a certificate after a hearing, and repeat offenders can be barred from operating an STR in Eastham for up to three years. That's a materially longer bar than the fine-only structures documented on some other Cape towns' bylaws.

A Separate, Longer-Standing Program: The Rental Certificate Requirement

Chapter 116's STR-specific rules sit on top of a distinct, longer-standing mechanism: Eastham's Rental Certificate Program, which applies to rental units generally, not just short-term ones. It charges $75 per rental unit and requires an annual water-quality test unless the property is on town water, plus a rental inspection in year one and every three to five years after that. Inspectors check smoke and carbon-monoxide alarms within 10 feet of every bedroom, hot water, labeled electrical panels, and general habitable conditions. Unlicensed rentals risk fines up to $300 per day -- a per-day exposure that adds up fast if a unit operates without the certificate for any length of time. Anyone underwriting an Eastham STR purchase should budget for both the Chapter 116 STR registration and this separate certificate program, since they're not the same requirement.

The Tax Stack: A Confirmed 14.45%, Structured Differently From Dennis

Eastham's combined short-term rental tax rate is 14.45%: the state room-occupancy excise at 5.7%, Eastham's own local-option excise at 6%, and the Cape Cod & Islands Water Protection Fund excise at 2.75%. That total lands on the same 14.45% figure this site's Dennis page documents -- but the components aren't the same. Eastham has not adopted the optional Community Impact Fee that Dennis charges (3% there). Eastham's total matches Dennis's only because Eastham's local-option rate is a full point higher than Dennis's. For an investor comparing towns, the headline number being identical is coincidental, not a sign the two towns regulate STR taxation the same way -- worth understanding both the total and the structure before assuming Eastham and Dennis are interchangeable on this front.

Property Tax: $7.71 Per $1,000, Higher Than Most Mid-Cape Neighbors

Eastham's FY2026 residential property tax rate is $7.71 per $1,000 of assessed value ($7.66 for commercial, industrial, and personal property), confirmed directly via the town's own Assessing Department page. That's on the higher end of the Cape Cod spread -- well above Mid-Cape neighbors like Dennis ($4.29) -- and it factors directly into annual carrying costs for an STR investment property. FY2026 is also Eastham's first year with a residential tax exemption, a modest 3% adopted on a divided Select Board vote, but that exemption applies to owner-occupied property; a pure investment property held purely as a short-term rental wouldn't qualify for it regardless of the outcome.

Before You Buy: Confirm Everything Directly With the Town

Short-term rental regulations, ownership caps, and tax rates change, and Chapter 116 is young enough -- effective barely a year and a half as of this writing -- that enforcement patterns and any amendments are still developing. This page could not independently confirm how actively the two-unit ownership cap and corporate-ownership bar have been enforced against existing owners since the January 1, 2025 effective date, nor whether the Board of Health has published further guidance narrowing any of the bylaw's terms. Confirm current Chapter 116 registration requirements, the ownership-structure rules, and Rental Certificate Program fees directly with the Eastham Board of Health; confirm the current combined tax-stack rate with the Massachusetts Department of Revenue; and consult a licensed real estate attorney and accountant before investing in an Eastham short-term rental property, especially if you're structuring ownership through an LLC, trust, or any entity with non-individual members. Nothing on this page is legal, tax, or financial advice.