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New Jersey Tax on Short-Term Rentals

Looking to spend a relaxing week at the Jersey Shore?  Thinking of renting out your own beach house for a week when you cannot make it down the shore?  Both activities will now cost you more due to a new tax on short-term rentals.

As of October 1, 2018, New Jersey implemented a law adding a tax that is imposed on all short-term rentals of less than 90 days (transient accommodations) except those listed with a real estate agent or broker licensed by the state Real Estate Commission.  It has been aptly nicknamed the “Airbnb Tax”.

The tax is New Jersey’s way of collecting taxes from bookings through a “marketplace,” online or otherwise, that is equivalent to the taxes collected by hotels. Quite a windfall for New Jersey as the tax is 11.625% with the option of adding an additional 3% in certain municipalities. The tax is the combination of New Jersey State Sales Tax at 6.625%, and the State Occupancy Fee at 5%.

There has been much pushback as property owners complained that they weren’t running businesses, and potential renters were threatening to go to other states where they didn’t have to pay extra fees.

New Jersey lawmakers listened to these concerns.  They agreed to roll back a tax for homeowners who don’t advertise their properties on Airbnb Inc. and similar online services, thus creating a two-tiered system for vacation listings.  This amendment is opposed by Airbnb as they feel the loophole will cause confusion for consumers who would see varying prices for the same listing depending on whether it was offered on or off the platform, as stated in written testimony by Josh Meltzer, an Airbnb public policy executive.

Currently the amendment is awaiting the signature of the Governor. 

So where does that leave hapless travelers and homeowners? Unfortunately, needing to pay the tax for now. However, do not write off your favorite NJ beach just yet.  Things may change in the not too distant future.

To learn more about NJ Tax Bulletin TB-81R click this link:

https://www.state.nj.us/treasury/taxation/pdf/TB-81R.pdf

Jessica Yothers

610-687-1600

jyothers@stephanoslack.com

August 6, 2019