Instead of taxing all transient accommodations, tax-speak for vacation rentals, New Jersey will now only tax rentals that go through a “transient space marketplace” such as Airbnb or HomeAway.com.
But in taxation, nothing is simple, so the New Jersey Division of Taxation has published a FAQ on what the new law does and how it affects property owners.
Speaking at the NJBIA-State Chamber Joint Taxation and Economic Development Committee, Deputy Director Denise Harding noted that among other changes, the law also created a concept of “professionally managed unit.”
“So if you are an owner of three or more units, you are still obligated to collect the sales tax, the occupancy taxes and any other local taxes,” Harding said.
Originally, the law, enacted in 2018, targeted people offering these types of “gig economy” rentals, both to raise revenue and level the playing field for more traditional businesses, such as hotels and motels. But the law actually applied to many of the informal rental arrangements common in shore communities. Properties that were simply advertised in classified ads, yard signs, and word of mouth were also taxed.
Legislators passed a revision to the law over the summer, which was signed by Gov. Phil Murphy on Aug. 9. Harding noted that because the signing date is also the effective date, Taxation would be considering some unusual refund requests.
“Aug. 9 is the end of a vacation week, so we have some rentals that end up being taxable for six of the seven days and not taxable for the last day.”
Go here to view the Division’s FAQ.