Bill Exempts Certain Rental Transactions from Taxes on Occupancy Charges

TRENTON – Governor Phil Murphy today signed legislation (A4814) amending the transient accommodations law enacted last summer to provide relief for many shore renters by narrowing the scope of rentals that are subject to taxation.

The administration 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.

“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.”

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.

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.

“Over the past several months, we’ve listened to Jersey Shore homeowners – many of whom are still recovering from Hurricane Sandy – who are worried they’ll see far less summer guests this season as a result of the short term rental tax. Summer tourism is the heartbeat of the shore, and this law was never intended to hurt the private homeowners who help it grow and thrive,” said Assembly Bill sponsors in a joint statement.

“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,” the sponsors continued.

“The summer rental business is a foundation of Monmouth County’s economy,” said Senator Vin Gopal. “As the 7th-largest employer in New Jersey, tourism has always been one of the Jersey Shore’s flagship enterprises. At a time of year when business should be booming, local homeowners have been struggling to fill rental slots for summer visitors. A bad summer at the shore could have a damaging ripple effect across our State’s entire economy, which is why this reform works to protect our traditional rental markets from the harmful provisions of this new tax, ensuring a brighter future for summer rentals up and down the coast.”

“The law was originally intended to apply to major commercial companies such as Airbnb but it ended up hurting private renters up and down the shore,” said Senator Bob Andrzejczak. “Folks that have been renting their shore homes to the same families for years aren’t doing it to make a fortune but more so to offset the cost of home ownership. The original law was never meant to hurt independent renters and luckily this legislation will correct things so that it no longer does. I am grateful Governor Murphy saw the value in this and took action on the

Advocates for the rental community also praised the legislation.

“The NJ Shore Rentals Coalition is deeply gratified for the Governor’s decision to keep vacations at the shore affordable,” said Denise Payne, President of the NJ Shore Rentals Coalition. “By signing this bill into law the Governor is both proving New Jersey is a tourism friendly state and protecting the integrity of the business economy along the shore. The Coalition applauds the efforts of lawmakers throughout the state who recognized that this tax law needed to be corrected and worked together to make it happen.”