NJ Wildwoods Vacation Rental Transient Marketplace Tax

Recently, Governor Phil Murphy signed into effect a new law that applies sales taxes and occupancy fees on short-term rentals brokered through online marketspaces, referred to as ‘transient space marketplaces.’ The tax moves into effect October 1, 2018, and may add fees to Wildwood NJ rentals.

What is the Transient Accommodations Tax?

Essentially, it has opened a series of taxes intended to capture the revenues that normally would have been captured through local real estate brokerages but were circumvented by online booking services like VRBO or HomeToGo.

Additionally, the newly imposed tax allows for municipalities to add an additional tourism tax up to 3%.  However, no municipalities have yet alerted the state of NJ of their intent to implement one.

What does the Transient Space Tax mean for owners or summer rentals in the Wildwoods? 

If you currently work with a real estate agent to schedule and manage your rental properties, there is no new tax or fees.  A key line repeated in the announcement is:

“Charges for the rental of transient accommodations are not subject to the [New Tax or Fee] if:

• The keys or other means of physical entrance to the property are provided to the lessee at the location of an offsite licensed real estate broker;
• The occupancy occurs for at least 90 consecutive days (permanent resident exemption).”

These fees only apply when a property owner chooses to use one of the transient space marketplace sites or publications to list and book their rentals.

Who collects these new taxes and fees if a vacation rental site is used instead of a real estate agency?

That depends on how the rental is paid for:

• If the marketplace charges a standard fee to the property owner to just list the property, and the property owner is paid directly by the renters, it is the property owner will be responsible for collecting and paying to correct taxes to Division of Revenue and Enterprise Services (DORES). This also required the property owner to register with DORES.
• If the marketplace processes the payments from renters, takes their commission and then pays the property owner, then the marketplace will now be responsible for collecting and paying these taxes.

If you are using a transient space marketplace to rent your vacation rental, check the terms and conditions of the site or publication to confirm how renter transactions will be managed.

Where do I go to learn more about how the Transient Accommodations Tax might affect my Wildwoods NJ summer rental?

You can read more about the Transient Accommodations Tax on the NJ State website here.

If you have more general questions about real estate and estate planning law in NJ, and how this new tax affects your plans, contact us.