For those interested in MORE details on the NJ Tax Laws regarding short term rentals, here is a summary of the “rules” and answers to some common questions. I will try to keep this post updated with more questions and answers if they come up.
- The tax (11.625%) applies to all short term rentals (<90 days) in NJ starting October 1st. (UPDATE) Beach Haven Borough now adds their own local Occupancy tax of 3%. This brings the total for Beach Haven rentals to 14.625%!
- The ONLY exemption is for rentals where the key or code is physically exchanged on the site of a licensed NJ Broker. This is the “so-called shore exemption the media and politicians have been talking about. They claim that since “most” rentals at the shore are handled through Realtors, this was a “shore exemption”. I guess they thought this was 1985 when that may have been the case. It is no longer.
- AirBnB and VRBO (any site that collects and transmits money for rentals) are/will be required by law to collect and remit the tax on behalf of the owners…..BUT if they don’t, the owner is responsible to do so.
- Owners who rent directly, whether through VRLBI, Craigslist, or to the same families year after year MUST register, collect and remit this tax. You must register at least 15 days before your first rental but no earlier than September 20th.
- It does not matter WHEN you collect the rent. The dates of the STAY are what matters. Starting 10/1/18, you must collect 11.625% tax for every night stayed (pro-rated if it overlaps days prior to 10/1/18).
- Tax payments are due on the 20th of the month FOLLOWING the stay. If you have renters from 10/5-10/7 for chowderfest, you must charge, collect and remit the tax. It will be due 11/20/18.
Why did the state pass this legislation?
Money. The state wants revenue. And the lobbying. The intent was to level the playing field for hotels who have been lobbying for the AirBnB tax for a long time. However, weekly shore rentals aren’t competing with hotels, so including them in the tax makes no sense.
Why did the state exempt Realtors?
The “shore exemption” was implemented, according to the bill’s sponsors, to give NJ shore communities an edge over surrounding states who already charge hotel & sales taxes. However, the way this was done with the “realtor exemption” eliminates those advantages. Most owners these days don’t use Realtors, and Owners who do switch to using Realtors will be paying them 10-12% in commissions and marking up their rents to cover it. Ultimately, the renters will still end up shelling out the same amount extra.
What if we rent directly without using a site?
It doesn’t matter. ALL rentals <90 days are subject to the tax except for those handled by a Realtor as noted above.
What if we book rentals and collect the money BEFORE October 1, 2018?
It doesn’t matter. The taxes are based on the date of the STAY not the booking, signing, or paying. No matter when you booked the stay or when they paid you for the stay, any stay starting on 10/1/18 is taxable. Taxes will be due on the 20th day of the month FOLLOWING the stay (October stays will be due 11/20/18)
How do we pay?
Every owner must register with the state in order to collect the sale tax. Here is the Online Registration form they provide.
Every month you must submit your sales tax receipts as well as your Hotel Tax receipts. Hotel tax is filed using the Monthly Payment Form.
What can we do?
Short term, find a local Realtor who is willing to do a “key exchange”. Basically, contract with a Realtor to pay them a fee per rental to hand out your keys/codes at their office to exempt your rentals from the tax.
Long term, we need to SPREAD THE WORD. Tell other owners, tell other renters, tell the business owners on the island. The most important thing people can do is CALL your local legislator if you are a NJ resident. If you are not a resident of NJ, call LBI’s district Reps (they did oppose this legislation for this very reason) and tell them how much money this is going to cost their district. http://www.njcommunityresources.info/njlegislators.html.
LBI District Reps:
Senator Christopher J. Connors
Assemblyman Brian E. Rumpf (Rep)
Assemblywoman DiAnne C. Gove (Rep)
The #1 goal should be to create a REAL exemption for Shore Rentals. They don’t compete with Hotels and they do drive revenue to the shore towns. This should not be a “Realtor” exemption. We need to push the legislators to amend this bill to actually align with their claims and the bill’s intentions…to tax AirBnB stays in the state that are competing with hotel rooms while incentivizing people to choose the Jersey Shore over surrounding states that already charge hotel taxes on vacation rentals.
Call your reps. If you are or know a business owner at the shore, tell them to call their reps. Get the Chamber of Commerces involved. Call the Governor’s office.