Jersey Shore Rental Tax Repealed

Shortly after Gov. Phil Murphy repealed a controversial tax on some Jersey Shore rentals last week, a number of readers had questions.

When does the law take effect? Who does it affect? Does it mean we could get refunds?

Here are some answers:

So what does the law actually do and why was it needed?

In short, the law rolls back a relatively new 11.6 percent tax on short-term vacation rentals that are booked directly by their owners through classified ads, word of mouth, or lawn signs — a popular way to rent at the Shore.

State lawmakers and Murphy enacted the tax last October in an effort to tax online marketplaces like Airbnb and VRBO the same way hotels are taxed in New Jersey — and thus bring the state government more revenue, but it had a big effect in other rental venues.

Critics said that owners who book Shore rentals in more traditional ways had been forced to add the tax on top of their rates. And that, they say, has driven away some customers who don’t want to pay the tax. This law (A4814) exempted those properties, as long as owners rent no more than two units.

So when does it become law?

It took effect immediately after Murphy signed it into law last Friday, more than halfway through the summer season.

I rent through Airbnb. Do I still have to pay the tax?

Yes. The tax remains for vacation rentals booked through online marketplaces. The law exempts only properties booked “through classified listing sites, local newspaper ads, referrals from friends or family, or placing a sign on the home.”

What if I rented a Shore house earlier this summer through one of those methods? Do I get a refund?

No. The law is not retroactive.

What if I booked a Shore house using those methods before the law change but my reservation takes place after it? For example, if I booked in June for an Aug. 20 stay, do I have to pay the tax?

The state Treasury Department says the tax is applied when when the rental occurs, not when it was booked. So if your stay is after Aug. 9, you do not have to pay the tax.

The department also said the state’s Division of Taxation should issue new guidance about the law “relatively soon.”

And you can visit this website for basic information about the law.

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How much will the state government lose in tax money because of this?

That is unclear. The nonpartisan state Office of Legislative Affairs said it “lack sufficient information to quantify” how much the state coffers will lose because of this.

Murphy said during his call-in radio show this week that “it’s a modest amount of revenue.”

The Shore seems to be thriving. Was this really an issue?

Murphy and lawmakers got a lot of pressure to repeal the tax from a group of renters called the NJ Shore Rentals Coalition.

And Republican lawmakers chastised Murphy for not taking action until half of the summer was over.

“Most of the damage of this ill-conceived aspect of this tax has been done,” state Sen. Declan O’Scanlon, R-Monmouth, said.

Murphy said he got a lot of anecdotal evidence from “passionate” critics who said this was damaging tourism at the Shore.

But the governor said his administration could not find concrete evidence of “any impact this tax was having.”

“By many measures, this was an all-time high for Shore tourism,” Murphy said during his radio show.

Still, he stressed, he wanted to make sure the state wasn’t hurting the “mom and pop homeowner” who rents out their house.

“The Shore economy is one of our crown jewels,” Murphy said. “We want to do everything we can to make sure that’s flourishing.”