Avalara MyLodgeTax > Blog > State & Local News > New Jersey governor signs bill exempting many Jersey Shore vacation rentals from lodging tax

New Jersey governor signs bill exempting many Jersey Shore vacation rentals from lodging tax

  • Aug 20, 2019 | Jennifer Sokolowsky

New Jersey Governor Phil Murphy has signed a bill that makes some New Jersey short-term rental operators exempt from collecting state lodging taxes from guests. The exemption applies to hosts with up to two vacation rental units who manage their rentals directly with guests rather than using a third-party platform such as Airbnb.

The bill was passed by the Legislature in late June, and Murphy was given 45 days to sign it into law.

The new law changed a previous measure that made all short-term rentals, except those facilitated by real estate agents, subject to lodging taxes. That law went into effect October 1 of last year.

Vacation rentals on the Jersey Shore have often been advertised and booked privately rather than through online platforms, and many Jersey Shore hosts advocated for the new law.

Up to 6,000 people may be affected by the change, according to Denise Payne, president of the NJ Shore Rentals Coalition.

Short-term rental hosts in New Jersey are required to collect state sales tax, hotel occupancy fees, and Meadowlands Regional Hotel Use Assessment fees — where applicable — on rentals of less than 90 consecutive days.

The law also allows some municipalities the option to impose new taxes and fees on short-term rentals.

HomeAway/Vrbo began collecting short-term rental taxes for its hosts in New Jersey as of October 1 last year. Vrbo collects state sales taxes, state occupancy fees, and Meadowlands Regional Hotel Use Assessment fees from guests on behalf of its hosts.

Airbnb also collects all the required state lodging taxes, along with municipal taxes for Elizabeth and Jersey City.

MyLodgeTax can automate and simplify lodging tax compliance, ensuring that vacation rental operators charge the correct rates and file complete tax returns on time. For more on short-term lodging taxes in New Jersey, see our state Vacation Rental Tax Guide. If you’ve got tax questions related to New Jersey vacation rental properties, drop us a line and we’ll get back to you with answers.

Jersey City council votes to keep controversial Airbnb law

Meanwhile, in Jersey City, the City Council has voted against overturning a strict new short-term rental law, despite a petition with more than 20,000 signatures supporting a repeal referendum.

The referendum petition was certified by the city clerk on August 7, giving the council a chance to repeal the law or let it go to the public ballot. The council voted to let the law stand on August 14, and if it does not repeal the law in the next 20 days, voters will have the chance to decide on repeal in the general election November 5.

The council recently passed the new ordinance amid concerns about how vacation rentals are affecting the supply and affordability of permanent housing, as well as the character of neighborhoods.

Among other rules, the law prohibits short-term rentals in buildings with more than four units and limits short-term rentals when the owner is not on-site to 60 days per year. Operators are require to obtain a permit from the city, which must be renewed every year, and the owner or an agent must be available 24 hours a day, seven days a week, to respond to issues within two hours.

The new law goes into effect on January 1, 2020. Existing short-term rental contracts are allowed until January 1, 2021.

Lodging tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Jennifer Sokolowsky
Avalara Author Jennifer Sokolowsky
Jennifer Sokolowsky writes about tax, legal, and tech topics. She has an extensive international background in journalism and marketing, including work with The Seattle Times, The Prague Post, Avvo, and Marriott.