Amended Law Eases Taxation on Certain Shore Rentals

On Aug 9, 2019

Gov. Phil Murphy signed legislation (A-4814) amending the transient accommodations law enacted last summer. The action narrows the scope of rentals that are subject to taxation.

The administration says it conducted a thorough legal and technical review to ensure that the legislation, as written, was not only feasible to implement, but more closely mirrors the original intent, which was to create parity throughout the rental industry by extending the existing tax on hotels and motels to certain short-term rentals, such as those done through online marketplaces.

The amendment limits the scope of transient accommodations that are considered taxable under the law (P.L.2018, c.49) passed last year to apply only to rentals of professionally managed units and rentals obtained through a transient space marketplace or travel agency, under certain circumstances. Under the amendment, rentals that a homeowner facilitates directly, such as through local newspaper ads, personal referrals, or signage, will not be subject to the tax if the homeowner is collecting the rental payment themselves.

“Our shore economy adds tremendous vitality and dynamism to New Jersey,” said Governor Murphy. “Access to affordable rental properties for visitors and income on rentals for homeowners are the backbone of that economy. Our public policies must be well-calibrated to allow this economy to thrive and grow.”

Primary sponsors of the legislation include Assembly members Joann Downey, John McKeon, John Armato, Bruce Land, Wayne DeAngelo, Eric Houghtaling, Vincent Mazzeo, Nancy Pinkin, Matthew Milam, Valerie Vainieri Huttle, and Senators Vin Gopal and Bob Andrzejczak.

“The bill signed into law today will help property owners who rely on word of mouth, signs, social media and longstanding customers to keep their rentals booked through the summer. It will help shore businesses keep customers flocking to their doors. And it will help tourists afford to have the vacation of their dreams right here at the Jersey Shore,” said Assembly Bill sponsors in a joint statement.

Meanwhile, in an issued statement, Senator Declan O’Scanlon, said the governor made the right call in repealing this short-term rental tax, but “it comes way too late. We are in August at this point, summer is nearly over and most of the damage of this ill-conceived aspect of this tax has been done. The governor and his policy folks need to recognize when something is emergent and do their homework up front, so they’re ready to take action the minute such bills land on his desk. This was a total failure of administrative planning and it likely, needlessly, cost the New Jersey economy millions of dollars.”

In the same joint statement, Assemblywoman Serena DiMaso wrote that the bill has been on the governor’s desk since June 27th, and that “many families have already been deterred from renting down the shore, and the number who might do so in the next three weeks of summer surely cannot make up the amount of revenue lost this tourism season.”

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