I noticed when I booked a summer rental in Hyannisport for this summer the increase in taxes: it’s annoying but not a game changer. The house is expensive to begin with, but my family and I can afford it. I find it typical short term thinking that the lady who says she won’t rent in Ocean City because of the tax yet will fly to Florida instead? Is her airfare free? When Jim Florio was governor and tried to balance the budget that the “great” Tom Kean foisted on the state by enacting more taxes, this state went ballistic: no one here wants to pay for services or consolidate services with the other little fiefdoms in the state. Whitman made it even worse as did Christie. When Corzine tried to amend the situation, he was booed at almost every town meeting he attended to try and explain his budget. No one likes to pay taxes, but until states and local governments sit down and agree to equable tax laws, this abhorrence to paying even these relatively small taxes will continue. I’m lucky my family and I can afford this holiday, the people who rent should lower their fees so that others can have a holiday by the water as well.
10
So Susan Hiller claims she is heartbroken to be heading to Palm Beach, Fla., with her four daughters and extended family for their annual summer vacation, instead of Ocean City, her "favorite place on earth," where she has gone since the age of 5. An 11.6 percent tax is forcing her to relocate her family this summer and pay for travel costs to Florida? I don't buy it. Guess we've become a nation of vacationers who know the price of everything and the value of nothing.
19
We had a duplex on LBI and used a broker ... it was on the beach and often each rented for the whole summer -- but not always. We paid the broker fee -- and the small up-charge for them to manage it. It was not 11% ... what's the current fee? Most people with decent properties used a broker then.
Airbnb has thrown the industry a curve ... brokers pay taxes and make for a better industry. 11% seems like too much.
My problem with Airbnb is the lack of control -- and they can do daily rentals. It gets crazy .... I get that people want to maximize income but there is a fairness issue
4
That these owners are crying about 11% tax chasing people away is just too bad, they skirted a tax they should have been paying all along. You have a choice, make nothing or drop your price 11% and make something. This is not calculus.
I also suspect that the tax refunds that people expected were instead bills from the IRS because their dear leader decided that the middle class should give the wealthy a respite from their tax “burden”.
10
Heartbroken having to spend summer vacation in Palm Beach??
Wish I had those problems.
14
Gosh, what a conundrum. They can't rent out their houses. They should be all booked up, but they aren't.
Here's a hint to the clueless: Lower the rental price. Undercut the market. You'll soon rent everything out.
Sometimes people go from problem to whining without actually thinking in between
5
Geez, it's getting so a guy can't make 27 grand a week tax free anymore! Let's be real: these rentals will not go unrented. At a point in the near future, these landlords will lower the rents to a level where they get booked. It's the oldest, simplest rule of economics. What they are complaining about is that capitalism is working both ways.
Were these folks all weepy about the loss of revenue for local papers and booking agents when they went with a cheaper, more efficient way to rent their properties?
I also question the good faith of arguments along the lines of "I could not find lodging within 11% of the price I paid last year, with the same amenities, so I've discarded generations of family memories of summer down the Shore in order to rent at a beach I'll need to fly to but has the same price and outdoor hot tub I'm used to."
7
The Golden Goose - gone, for the moment but don't worry, "they," the visitors, will get over it . .. won't they?
1
"Susan Hiller said she was heartbroken to be heading to Palm Beach, Fla.," rather than pay the 11.6% short-term rental tax in NJ. Whaaaa?!?! My wife has a house in Palm Beach County that she rents out through AirBnB, and is completely booked up for the season. Her guests pay a 7% occupancy tax to the state of FL, and 6% Tourist Development Tax to Palm Beach County: 13% all together. You guys in NJ have it good.
3
Why shouldn't Airbnb pay taxes like any other business other than hedge funds.
8
“George Triebenbacher, 56, grew up on Long Beach Island in New Jersey and now owns seven properties there that he’s been renting out since 2010. His weekly rates vary — three homes rent for $1,650, three go for $5,500 and a larger home fetches $10,000.”
This guy is clearly not a small time operator renting out a spare bedroom. He is exactly the kind of person this tax was intended for. Airbnb rentals like this destroy neighborhoods and communities, drive down property values and restrict housing stock.
22
So you own a hotel. You've plugged along, collecting and paying your taxes, being a part of a community, tolerating rising and falling profits with the economy, employing local help, adhering to all sorts of regulations (including safety and fire regulations), donating to local charities, etc. And then along comes this whole new industry...and they DON'T WANT TO have to do all this stuff. And they stomp their feet, and whine, cry, and threaten the end of tourism as we know it. See anything wrong with this picture? I hate these lousy internet industries.
18
This article is long on anecdotes and short on evidence. Is it really cheaper to fly a family to FL from Philly than to drive over to the shore and pay the fees?
9
I suspect that non-resident homeowners on the New Jersey shore pay higher real estate taxes than those who are either year round residents or who live inland. As such, the state/county is already getting disprporportionate income from those properties. Seems really unfair to further penalize them with an occupancy tax...
Good.
If Airbnb is going to turn residential neighborhoods into motel strips, they should pay and pay until they realize they cannot flout zoning laws.
9
I host an Airbnb in San Jose, California and rely on the income to keep my retirement afloat.
The city of San Jose requires that I pay the same hotel tax that hotels in the city do. (10%) Airbnb collects and remits this tax for me.
I think this is only fair and provides a level playing field for anyone hosting visitors. As an Airbnb host, I don't have to pay any salaries, benefits, disability insurance or other costs associated with a regular business.
As such, I can offer a better value for the guest than a hotel and still have a reasonable income.
Now, if they assessed an ADDITIONAL tax above and beyond the hotel tax, I'd scream bloody murder. That would be nothing but protectionism for the hotel industry while lining the pockets of the city.
Hotels should not be any more exempt from progress than any other business.
Adapt or die.
7
@Holden Caulfield.. Holden, On the Jersey shore we have a 8-10 week season. The point everyone in making is that adding this TAX to vacationers will either push them away or they wont spend that $300-$500 on the boardwalk or out to dinner. The NJ shore is not Disney and its not a tropical island. People vacationing in NJ are on budgets. They will still come to the shore but they will not spend as much. And that is the problem. In some shore towns, small Mom and Pops can go out of business because of 3 rainy weekends..
We DONT need ANY reasons to push people away OR have people not spend. AirBNB shouldnt be Taxed in NJ. They should be praised for bringing people in to spend money.
This is a huge mistake.
1
Don't these people listen to AOC? Stay home! Shrink your Carbon Footprint now. The world will end in 12 years without your help. Wake up millennials.
3
Interesting carve out for Realtors®
4
@SXM 2nd Largest Lobbyist in NJ.. 2nd only to TurboTAX and HR Block
1
I’m just loving the free advice from non-owners to just suck up the tax or for the “wealthy” renters to suck it up. Why not tax long-term renters directly since they use more services since they live there year round. Now that would be fair!
if a Air Bnb renter has an emergency, does an EMT truck come? if there's a fire, does the fire department respond? what if there is an altercation or a robbery - do the police come if called? why shouldn't the sharing economy renters pay the same tax, partly covering emergency services, that hotel guests pay? or is the sharing economy built on the idea of making money by skirting the normal inspections, licenses, insurance, and other costs and rules, and sticking everyone else with the responsibility? the more you think about it, the mkre it seems like a scam unless local authorities take it seriously and police it diligently.
13
Of course there is no legitimate reason for airbnb to escape hotel taxes. The only reason it doesn't happen now is the lobbying power of airbnb and moreso the real estate industry.
If you want to be disruptive, you have to fix what you break.
13
Shore rental demand far exceeds supply during peak season. I find it hard to believe that AirB&B properties will go unrented. Yes, short term rentals should be legalized and yes they should be taxed, just like any other commodity.
Perhaps NJ is ahead of the eight-ball on short term rental legislation, but if anyone abandons NJ for, say, DE to skirt the fee, it's a short term solution. Some taxing normalization is imminent regionally if not nationally. In the meantime, there are plenty of people who won't bat an eye on the extra +/- $200 in taxes for a week-long rental.
3
I live on an island 15 minutes from seattle by ferry. Between air bnb and rich, young amazon techies, there is nowhere to live anymore. Anything that used to be a rental is now airbnb. So i am sorry for people who have lost their income due to taxes on air bnb, there are those of us who have been locked out of places to live as everything is now airbnb. Maybe the new jersey shore people could rent there places out like the old days. I wish the people on our island would.
7
People who rent through Airbnb should pay the same taxes as hotel guests do. It is the only fair approach to the rental market.
8
Whatever the merits of the issue, despite what that one person says, no one is going to forfeit a deposit because of an 11% tax. And the person renting out 5 properties is not a "homeowner" sharing their "home" - they are in the rental business and should be regulated accordingly. I've stayed in many rentals on the Shore, but the worst situations are always when you have loud partying neighbors next door.
15
It seems to me that the people who are cancelling or otherwise not reserving their vacation rentals are doing so based on principal rather than on economics. They will probably spend the same or more elsewhere. Most states will eventually do the same as NJ.
7
I don't have have a problem with the tax if EVERYONE was treated equally, Realtor and homeowner alike. If a short-term rental is leased, it should not matter if it was done through a Realtor of a homeowner. It should either be taxed or exempted at the shore. There is an unlevel playing field as this tax is exempt for Realtors. The NJ Realtor's lobbying efforts were excellent!
We used to rent through Realtors, but found that there were people allowed to come through any time, unaccompanied and that we were being charged a fee, as well as the tenant was being charged a fee for writing a computer generated lease. There were MANY keys made of our residence and just handed out to prospects to look.
I wanted the control and safety of doing it myself and am now being penalized for that.
2
I have a permitted vacation rental in Maui, Hawaii. They charge us 14.42% tax. They raised our property tax by $7,000. Our permit only allows us to rent the entire 2 story home to a maximum of 4 people. They just passed a law giving a possible $20,000 fine to unpermitted rentals of less than 180 days, but there is no enforcement and after 12 years of happy guests we are almost out of business. I would like to sue the county, they changed the rules constantly as we went through the permitting process.
Sounds like a class action lawsuit would be a good idea in this case...
AirB&Bs should absolutely be taxed like hotels and inns. Investors also buy up properties for the purpose of converting them into AirB&Bs. If tourists can afford summer rentals in premier vacation areas they can also afford to pay taxes on their lodgings. I’m not buying the argument of many who have posted that they will be renting elsewhere because of this. Florida in the summer is not the Jersey Shore nor Cape Cod in the summer.
12
Great. Hopefully the RE price will come down and families can go enjoy the beach again. For vacations people can just go to a hotel or rent the old fashioned way.
5
Should be applied worldwide. People supporting AirBnB, have no idea of the impact it has on the housing market. People with low incomes or mid incomes, are not able to afford housing anymore in many cities, as AirBnB has a massive impact on the offering of available and afordable housing.
9
Airbnb is not to blame for all the world’s problems...
1
So the properties will be booked 3-4 months in advance instead of 7-8.
2
What is the purpose of the tax? Is it to rein in AirBnB, to protect the hotel industry, to pay for infrastructure used by AirBnB visitors, or is it simply a newly identified source of revenue?
Hotel guests add to the local population and consume services (law enforcement, to name just one).
Perhaps, the revenue focus should include the hotel industry which is cheating local and state governments out of revenue by artificially lowering the nightly cost of rooms, only to slap on a substantial small-print "Resort Fee". This practice has been outlawed in Australia, New Zealand and Europe for the very reason that the Resort Fee is frequently deceptive; moreover, it skirts around occupancy taxes and cheats local government of income. At the same time, business travelers often do not get reimbursed for Resort Fees. Ironically, at a time when the car rental industry became more transparent with its small-print fees, taxes and charges, the hotel industry has moved in the opposite direction.
3
I'm still marveling at the simple faith it must take to rent to strangers--especially one's own home, let alone a tax on these!
3
The right thing to do.
Not only taxes should be levied but the owners should have to get a permit and have their units checked out for safety.
Hotels and motels have to get a permit and get checked for safety. Why should the AiBNB types and other short term landlords get a pass?
It is all about fairness, fairness to hotels and motels and even more about ensuring that the renters are safe.
8
"Though it has frustrated renters and homeowners, Airbnb frames the tax as official recognition of its legitimacy, putting the company on equal footing with the hotel industry." This being the understanding, an knowing Hotels and Motels charge a similar tax, what's the problem? Is it just bashing Government again? Who is going to pay for Police, Fire, and First Aid? The only reason it's cheaper to go to Florida in the Summer is because no one goes to Florida in the Summer. The temps don't lie.
6
My wife and I have gone to Cape Cod for vacations nearly every year for decades, but this may be our last for some time. The new tax begins to take effect July first ,and increases costs between about 12 and 15%. This is bad enough. However, perhaps because of the complexity involved with receiving and paying the tax, nearly every rental home we look at has now contracted with a realtor, who is charging a minimum of $150 extra, plus cleaning fees, not always charged before, of at least another $150. Add this to "service charges" and your $1200 rental often exceeds $2000. For many middle class renters this is a significant disincentive to . We plan to vacation in Vermont and Maine in years to come. A shame.
1
@simon, I don't see why you think it is a shame to visit Vermont and Maine. They are equally as nice as over-rated Cape Cod and you will probably have a much more relaxing vacation that costs far less.
3
Think again. Vermont and Maine are getting expensive.
Furthermore, and I think it's because people are renting their houses out, there are fewer houses on the market in Maine at any rate. Oh, Mainers move away, but they keep the house as an income producer. What is happening in cities is happening equally elsewhere: Airbnb is destroying neighborhoods.
1
" The only exceptions are rentals arranged through a realtor, which are not subject to the tax."
Talk about special interest loopholes. This is just not right.
5
I'm a bit confused by the woman who lives in Philadelphia, has been going to the Jersey shore since she was 5, but b/c of an 11.6 % tax is now going to go to Palm Beach instead. It seems that the cost of traveling over 1000 extra miles for your vacation would cancel out the extra cost of the tax. Did I miss something? Save the airfare, drive to the Jersey shore, and enjoy yourself.
15
@Andrew N. Cause NJ is expensive. A week at the shore is already comparable to a vacation where you get on a plane. This tax is the tipping point for some
1
@Andrew N Because she's either a) arguing in bad faith, or b) without sentiment.
She's not flying to Daytona Beach, she's flying to Palm Beach. She's not value shopping.
1
@Andrew N being in the south plenty of people come down in the summer. Ever herat of Destin? Maybe she wants a change, maybe she doesn’t want to see her money go to taxes, maybe she got a great price for the trip, or maybe she would rather have room service and not have to clean someone else’s house and have to pay extra. Who who are you to judge her. She can do whatever she wants.
Rather than finding ways to siphon new taxes, states and cities should ban their use outright. In Hawai’i we have an immense housing shortage. Entire streets are now vacation rentals in some towns. What matters to the community should be its local residents having an affordable place to live, not tourists who end up inflating the cost of housing. This is why we have hotels. I believe the State of Hawai’i is playing with fire by allowing the rentals to continue.
7
Unfortunately you live in one of the highest touristed locations in the world. Banning Airbnb is not going to solve the problems you are experiencing. Higher taxes and then using those taxes to develop low income housing for instance - sounds like a smarter way to go about it.
Two points: One, it's the decision of the owner whether they pass the tax on to the renters or not. Two, special taxes on short-term rentals make most sense in situations where the AirBnB clients displace regular renters in tight real estate markets, e.g. New York, San Francisco, Boston and similar locations. In places like the Jersey Shore which has a high seasonal variation in the number of vacancies, such taxes are really all about getting money into the budget. Now, that is still a very valid objective, but it shouldn't be cloaked with the pretence of protecting year-round renters.
2
I realize the story is centered on the tax, but the voices missing from this article are homeowners like myself who are sick of our neighborhoods being taken over by what are essentially unregulated hotels, who would love to see more barriers to unregulated STR growth. Taxes are a cost of doing business in this country.
9
Houses are legally allowed to have month to month rentals. That’s a business right?
1
I don't know, 11.6% price increase makes this much difference? A woman who thinks the Jersey shore is the greatest place on earth goes elsewhere because of an 11.6% price increase? That seems totally nuts to me. Go for a day or two less, cook more of your own food and skip a couple of meals out.
If the Jersey shore became more popular rents would go up. I wonder if many of these people would be okay with this and it's just the fact that it's a tax which is bugging them.
As for the owners, reduce your prices a bit. If the region became less popular that's what you'd have to do. Cut your price by 5% or 6%. Yes, you'd like more money, so would we all. But we also need government to take care of certain things for us. Are the various government bodies in New Jersey wasting money? Don't answer without looking. What would you cut? Get involved in local politics and keep an eye on what your money's being spent on.
Or just moan and complain.
12
@Jack Toner. People often can stomach taxes when the govt provides a service. There is no service here just a money grab.
1
@Rich The guests in these rentals enjoy a wide range of government services, as do the owners of these businesses. The trash collection, safe streets and upkeep of public spaces is what brings value to these places. People aren't renting at these prices in the dregs of Atlantic City.
2
People who can afford to buy rentals that go for $10,000 a week don’t understand supply and demand? Perhaps they should have educated themselves before investing in properties. That a 11% tax affects their rental rates is disingenuous.
5
Yoikes. 11 percent? Lower the price. These rentals are a hugely overpriced deal to begin with.
1
Thanks, NJ this is is great. If a landlord upped the rent 11.6% it's the free market, if it's a tax then some claim the sky is falling down. Most VRBO/Airbnb rentals are from corporate agencies but when an issue arises they find an individual landlord to claim who claims he depends on the rental for the mortgage. In California these short term rentals ruin towns and neighborhoods, increase rents and increase the burdens for police, fire and other services.
9
Consider this scenario. Houses by the beach in those small towns have septic systems. In July or August over each four weeks about a million people come to vacation. Such towns have a winter headcount of 12,000 or less. Human waste may be underground but the waste does not go to a sewage treatment plant or sit still. It slowly seeps. At lease in MA the money will go toward water treatment. Regan ended federal money to put in sewers so it is all on the small town tax base and any state largess.
2
@poslug- homeowners are required to have their systems pumped out when they reach capacity.
@Poslug Not in NJ. These NJ beach communities are all connected to municipal sewage systems.
1
Missing from this article are the local brokers like Jesse and Fox who have previously dominated the short term rental market in places like Ocean City. It's not clear why the renters who were likely booking through them long before Airbnb came along can't continue to do so, since they are exempt from this tax. Conversely, I can't help but wonder if they had some influence over the tax's passage, since this will probably help them avoid disruption by Airbnb.
2
So poster child is going to spend a day (or two) flying to and from Florida, renting a car down there, all to avoid an 11.6% tax? And is heartbroken to do so? Really?
The tax does seem steep, but appears to apply to hotels also, so the footing is the same. The only objection in my view, is that rental through real estate agents is excluded from taxation.
Finally, taxing discretionary items is far better than taxing necessities.
7
State Pensions don't pay for themselves. Taxes in NJ are only going to go in one direction but up. For all of Chris Christie's tough talk he only made the situation worse. Then again no governor in my lifetime has made any meaningful change to NJ's fiscal situation.
In NY we have high taxes like NJ. At least on a state level we have a top 5 in the nation credit rating. We have money put aside for the future pensions. NYC is another story.
1
Lower your rental price. Accept that what you get will constantly vary. I have a rental condo in a major city, and what I can get from a new tenant differs from year to year. It's better to lower your price than to have an empty place. My starting price is always at or lower than the competition, and my place is in better shape, both of which ensure that I never have a vacancy. I don't need Excel to know that's the way to go. BTW, to have not had to pay a tax until now was an unwarranted free ride.
9
As a Leelanau County, Michigan cottage owner reading about NJ's targeting short term rentals is disconcerting. Before innovative companies like Airbnb and Home Away, less than 10 cottages in our immediate area were available for rent. Today there are nearly 150 cottages for people to enjoy as opposed to just sitting vacant.
What NJ is doing is a money grab and even more offensively it is financially hindering people's enjoyment of their vacation and family time. The government should focus on managing its own property and affairs, and should stay out of this little niche created by the internet.
We and the local people who help us rent our cottage put in a great deal of effort to accommodate 25+ families per year. In addition to our own time, we pay two handymen a couple thousand dollars a year to help keep our place it tip-top-shape, a cleaning service a few thousand dollars more than that to make ensure hotel-standard cleanliness. Sales taxes to the State of Michigan add up to a couple grand a year, and with the money left over we make modest improvements, the materials for which are bought at the local hardware store.
Our decision to rent our place adds considerably to the local economy, including the tax base, not to mention to the memories created by the families who rent from us. That is what happens when private people are free to use their private property without government, regulation and tax interference. What is wrong with that?
We have a similar tax in our city and I’ve never had an issue with guests paying up. It’s the same as hotel tax. It just takes time for people to get used to it I think. I’m booked year round. The tax funds a task force that deals with noise complaints, over occupancy, and other problems associated with short term rentals. As a result, problems in the city have gone way down. It’s the only way to go. If people are having issues - bring your price down a bit to accommodate them and raise it back next year. I’m sure people are upset but the vast majority will get used to the new tax by next year and there will be fewer issues if that new money is put to good use.
5
So how much tourist tax is paid for a hotel room? If that 11.6% is simply charging the same as is being paid in tax for other accommodations - then that seems fair. The private renters had a sweet thing going, and now that they have turned corporate they shouldn't.
5
If I'm going to spend $2400.00 on a rental for a week, I'm not going to let the extra $35.00 a day scare me off...I might cook in an extra night or two but I'll still come to the Jersey shore.
5
I think another reason people are not renting at the shore this season is the fact many people at not getting the tax refunds the use to get before Trump’s tax bill. People were using those refunds to fund their vacation rentals, now they are not.
7
I don’t really know what the issue should be with taxing short term rentals. It’s a business, and people are buying up or owning properties to rent them out, as it would be otherwise uneconomical. Businesses are subject to income tax, sale and use and service taxes, etc. and that’s how it is. The use of the property implies cost for the community, and someone needs to cover that cost. AirBNB and consorts in addition virtually support the tax free expropriation of entire neighborhoods from the people who actually live there, so I think at least the users should pay for it, and the only way to secure that is to tax that usage in the same way as any other hotel business. People have to deal with the fact that in the digital economy, there is no room for a small business exception, as the platforms allow now to monetize every tiny little property at any time on a global scale, aggregating all property owners into a gigantic global business, something what a small property owner never could do before. You can’t have it both ways. A tax of 11% is not excessive and actually a fairly good deal, if you compare this to other hotel taxes imposed in various US states and municipalities. The strange thing here in the US is that everyone wants to have good infrastructure, good schools, good public medical services, etc. but only the other ones (the super rich, the 1%, the 10%, the big corporations, etc., etc) are supposed to pay taxes for it.
4
We pay 11% tax on our rental condo in Sun Valley, ID. We pass it on to our renters and disclose it up front. We're happy to pay as a cost of doing business. NJ will get used to it.
5
Much Ado about nothing.
11.6%? Please.
Hotels charge this and then add on "resort fees," "internet fees," etc. I'm an AirBnB host and I welcome cities working with the sharing economy to make it work for everyone. The alternative is places like NYC and San Francisco where short term rentals are effectively prohibited.
8
Portland, Maine, has also struggled with how to manage the short term rentals in private homes. The city requires a registration fee for each short term rental. But the fee is low if you are living in the house and supervising the rental. The fee is high if you are renting a space where you do not live. This was to try to combat investors who were snatching up condos to rent short term, causing a housing shortage.
So homeowners who want to rent out their spare room can still do so without too much pain. Being in someone's home where they are present means that heavy partying and drunken brawls are much less likely.
It's all part of an economy that is grinding down workers. IF you have a car or a spare room that is capital and you need to make it work for you.
3
@memosyne Heartily agree! My husband and I rent out a room in our house on Airbnb. Neither of us could stomach taking a rental space away from someone else, but Airbnb gives our budget a little padding in a space in our home we wouldn't really be using anyway (and definitely wouldn't be renting out full-time). We've been doing it for about four years now and have mostly positive experiences. It's a lot of work, but we've met some wonderful people from around the globe, and the fact that we pay tax to help our county makes me feel better. We encourage guests to visit local businesses, and we often host folks who tell us they are able to have a longer stay, or bring more friends (leading to more meals in restaurants, tickets to events, etc.), thanks to prices lower than local hotels. Heck, we even go out for dinner or the movies thanks to their contributions!
I do think it is morally wrong for Airbnb to be eating up housing stock. If we want Airbnb to last, I think we all have to hold ourselves to a higher standard, not renting from such properties, until such regulations are in place that it is not being abused. It's not so hard to figure them out on Airbnb. If it's too good to be true, it probably is. Rent a property where the host is on site.
3
"Can't we act like hotels but not pay for it?"
Apparently not.
It always amazed me that, at one point, taxi medallions in New York were going for $2,400,000 a piece. It was basically a protection racket run by the city. "No medallion?" Then you can't give someone a ride. Then Uber came along, and, overnight, the city just kind of said, "OK", causing the value of the medallions, which were going to be many drivers retirement funds, to plummet. It would be like the Mafia charging protection, and then allowing someone else to come in and take some of your turf. It doesn't wash.
A free market means that everyone plays by the same rules. Once it starts playing favorites, as it did with Uber and Airbnb, then it's no longer free, it's rigged and weighted.
"Can I run a business, but not pay taxes like every other business?" - No, you can't. And complaining about it simply calls attention to what you are, which is an elitist. Someone who thinks the rules should not apply to them, only to everyone else.
BTW: Thanks to Trump and the GOP, sympathy for the rich is at an all time low. And, frankly, it's about time.
To be clear, the, "I can barely survive on the $10,000 a week I charge for my rentals!" - Is not going to garner much sympathy from the rest of us. Nor should it.
4
@Chicago Guy Sounds like those "medallion fees" were a payoff/ripoff.
@Chicago Guy big problem with the tax is not everyone plays by same rules. Relators carved out an exception. So if you pay the realator 12% to rent your place you don't pay the 11% tax. If you rent it on your own why are we paying an air bnb tax
Unlike residents of the state, tourists are not obligated to pay any taxes in New Jersey and are free to keep their money and spend it elsewhere. It takes a very high degree of entitlement to other peoples' money to assume tourists will show up to be taxed when the same amount of money can take them to many other places that are actually welcoming tourists.
1
Very few New Jersey homeowners will be able to deduct this new AirBnB tax, and so 11.6% will mean just that: 11.6%.
Many cities and states (such as San Francisco, where I live) have high property and state income taxes (SALT), and so the new $10,000 cap on SALT deductions hits them hard. I think Trump and his people intended to "punish" coastal states that tend to vote Democratic, but that's the effect regardless of anyone's intentions.
This nevertheless strikes me as fair.
A city or state is, and always has been, free to charge higher taxes, or to provide more governmental services, than other cities or states. But a resident of a high-tax state was formerly allowed to deduct 100% of those higher state and local taxes from his federal taxable income, thus lowering his income taxes. That raised everyone else's taxes by the same amount (unless the government just BORROWED the shortfall, of course -- perish the thought).
In other words, a Kansas resident helped to pay for governmental services provided only to SF residents. If SF decided to increase the number of police on SF streets, or to build a new fire house, SF residents would be able to deduct 100% of the increased property taxes from their federal taxable income, thus reducing their income taxes and increasing Kansas residents' income taxes.
Kansas residents STILL help to pay for SF-only services, of course. But the $10,000 cap on SALT deductions limits their share of the cost of those SF-only services.
I do not understand why people think they should be excused or exempted from paying tax. I pay TA and GET taxes on my Hawaii property based on the amount of income generated, just like the hotels do. The rental pool collects it for me and I pay it. It is part of doing business. Although I understand they have a bit of trouble collecting it from Airbnb places. Bottom line is taxes are a fact of life and thinking one should be excused, whether as the owner or as the consumer, is a bit arrogant IMO.
15
I've rented at the Jersey shore for the last 38 years. But I've always gone through a local broker or on a few occasions rented directly from an owner.
AirB&B has emerged to upset this arrangement. By cutting out the broker, they take a lower fee of the rent for themselves.
But they also leave renters stranded when things go wrong. And they encourage big investors to buy up homes and turn them into full time transient rentals.
They may not affect most shore communities, but wait until it spreads elsewhere, and it will.
The legislature should consider revising the law to allow private owners who advertise on line themselves, say on Craigs list an exception while keeping the AirB&B colossus on the tax role.
37
@Drspock That AirBnB would leave customers stranded in case of problem would be quite surprising, and is certainly not my experience: accommodation businesses have very stringent regulation in that regards, because failure to delivery is obviously much more of an issue for a hotel business than for say food delivery. AirBnB is subject to that regulation, and have strong obligations towards the client (such as providing alternative accommodation) if the host doesn’t deliver.
It is not in AirBnB’s interest to leave a customer stranded, and if you call their customer service they will usually provide a credit to be used for another place (with some bonus for your trouble). It obviously helps if you had conversations with your host on the website, or through emails and text messages that you can forward to them to prove that it is the host’s fault.
1
Why should anyone get special treatment? If you rent property, that rental should not be exempt from taxes. It’s not fair to all of the people who follow the rules.
7
@Bob Robert. A "credit" for a future stay hardly solves the problem at hand with a current rental. You sound like a rep for Air BnB.
2
This tax isn’t fair. It should also be levied on those who rent from realtors and not only on those who rent through listing sites or directly with the homeowner. I am an older homeowner dependent on rental income from a small apartment in my home to supplement social security and a small pension. If my renters, who consistently give me a 5 star rating, decide to abandon me and rent through a local realtor to save the 10% tax I’m going to be in trouble. However, if everyone who rents pays the same tax, no matter who they rent from, then the playing field will be equal and I, and other small businesspeople like me, can continue to offer friendly, personal service and great accommodations at the Jersey Shore. But now, I have to finish caulking and painting some windows, clean up some of the winter mess in my garden and buy some nice canisters to hold coffee and sugar to get ready for my guests arriving on Friday.
3
We live in Brooklyn. Most summers we rent a house on the Shore. We've never not had the shopping done, through a realtor, and the deposits down by mid-winter. In the old days we had to drive down in January to be taken around. Since the internet we can see what we're hoping to rent online (and hope the pictures reasonably reflect reality). None of the houses have been anybody's regular homes. At most the owners block out their own few weeks in the summer. So, yeah, it's a business. (The antiquated kitchens and back breaking mattresses don't exactly hint at low traffic). If the owners stopped using realtors when AirBnB happened they saved a bunch of money - we were never made cognizant of realtor fees baked into our total. So, now some of that money has to get paid again and (I hope) maybe it'll benefit the local towns and their infrastructure. Cry me a (Tom's) river. The only point to the whining I can understand is that of new owners who bought in the "sharing" era (at post-Sandy fire sale prices?) and never had to pay realtors. Whatever.
6
So someone wants to pay $2,400/week to stay in a vacation home but refuses to pony up the $280 in taxes. I'd be happy to afford that total for a vacation some day. Later this week, I'm sharing a midlevel chain motel in LA with a friend for one night for $164 plus $20 in taxes, about what I expected.
One problem is that states, counties, and cities did not act soon enough to get ahead of the short-term rental industry and are now playing catch-up. In some cities, such as SF, the taxes collected go into a fund that gives grants to cultural organizations. Tourists and business travelers go to the museums, ballet, etc., and Airbnb, VRBO, and the like should collect the same hotel tax. Even if the taxes fund other services--who will put out the fire at your Airbnb?--the money is justified.
14
@JLD it’s not just to pony up and suck it up. That extra cost is people’s spending money. Ever heard of a budget???? People will stay in and not spend on local businesses, which hurts the overall economy. People don’t have unlimited funds, even those who stay in more expensive houses. Government always take take take.
Mixed feelings.
I remember when I looked in the Asbury Park Press for my summer rental. When those started to dry up, Craigs List was the place to go. For the past 3-4 years I have had to use airbnb because APP and CL don't really have listings anymore.
If homeowners want to rent their spaces they should go back to inexpensive listings in online newspapers and CL and set up a paypal account. Yes, it's more work for the homeowner (or pay someone else to do it) but it's all your money.
Airbnb doesn't really provide a service. They are just middlemen taking your money for a slightly convenience.
27
@Hazel Problem is CL is now full of scams. One of the biggest benefits of Airbnb is placing a barrier to scammers.
10
@TomB How do they do that? There is no tenant screening at airbnb.
5
@Hazel Sounds like you are encouraging tax evasion...
2
The people that rented out homes on the shore should be upset with AirBnB. They had a sweet thing going. Renting out their homes every summer, usually enough to pay for SALT and Mortgage. Now they have to share some of their income with the state. Also, I live in NJ and any opportunity the state has to close a tax loop hole I applaud.
40
@Pecos Bill The landlords do not have to share any income. The tax is for the tenants, not the landlord.
2
With all due respect to the commenters from Wisconsin, Florida, and North Carolina that have chimed in essentially asking, “What’s the big deal?”, I would ask what your other taxes look like? Right, no income tax in Florida coupled with low property taxes in comparison to the Northeast, very low property taxes in N. Carolina, and I would assume Wisconsin as well, though I don’t know that for sure.
The problem here is twofold – 1. NJ has the highest property taxes in the Nation. Taxes of $10K plus a year are considered the norm, while $20K and upwards are not uncommon or unusual. 2. By taxing these rental owners you will surely drive business away from the local economies that survive on the summer rental season. Who wins then? This is a shortsighted move on the part of the legislature to bring in some cash in the short run, without considering the long term implications.
Last summer we rented a house in Cape Cod after spending the last two summers in Cape May. We had a wonderful time at both places, but decided that we would not be going back to Cape Cod because it was too cost prohibitive when taking into account the taxes on an already expensive rental.
There was always the Jersey Shore, but maybe not.
20
@CTR
Of course, one option is for the owner to lower the rent. This effectively shifts the tax to the owner. All the local businesses would continue to benefit.
15
@Spankygalt Fair enough, and I neglected to mention this in my original post. If I were an owner, this is the approach that I would take given that it's better to earn a little less on the property than possibly have the property unoccupied and therefore losing out even more. As a renter, this was also obviously my initial reaction.
That said, I think my original point regarding the taxes paid on these properties still holds. I would not be surprised if the property taxes for many of these locations is well above $20K. Think about that for a second. That's more than most people are paying on their mortgage throughout the country.
2
@CTR Westchester has the highest property tax in the nation. And we are forced to use Con Edison which makes PSEG seem cheap.
2
1. Renting out additional properties does not qualify as "home sharing" in my books, since the "homeowner" is not home. Airbnb is essentially a way to skirt rental regulations, just as Uber/Lyft destroyed the cab industry by skirting industry regulations.
2. There are safety issues involved in renting a property from someone you don't know who holds the keys, and whose property is unregulated from a commercial standpoint
3. NJ is now getting taxes out of this but the legitimate residents of apartments, condos, and houses-next-door are getting stuck with increased noise, traffic, cleanup, parking, safety issues, and anything that everything else that would be related to living next to a commercial property.
Maybe Airbnb should be limited to legitimate homesharing, where the owner must be literally in residence along with any paying "guests".
At the very least everyone affected by the rental should get a share of the profits.
87
Not all Jersey Shore vacationers are wealthy enough to easily absorb the tax on top of the high rent. While living a few hours away last year I stretched my budget to have a family gathering there at the cheapest AirB&B suite I could find. Many families who are dispersed in the region save up and pool their resources all year to gather at the beach for a week, paying more for those 7 days than they pay each month for a mortgage.
AirB&B property owners who whinge about the tax apparently feel entitled to profit from their business while externalizing the public service costs of the very tourism that creates demand for their property. They are able to shelter their proceeds from personal taxes through depreciation, maintenance, mortgage deductions, etc., often to the point of declaring losses (one likely reason we don't get to see Trump's taxes).
AirB&B owners who are whinging about slow reservations could fill their calendars if they continue to rent at the same price their tenants are used to, inclusive of the new tax. Absorbing the tax now would help them maintain customer loyalty and bring in new tenants who can't afford the increase to competing rentals. Over time, as demand allows, they could increase the rents gradually to rebuild their profit margin.
73
At the heart of the Airbnb debate is the unfairness of the competition between lodgings--hotels, condos, homes et al--that are in the system, and airbnb, which isn't.
This 'system' has rules and regulations that cost property owners money to adhere to, and airbnb has radically cut these costs out of their financial formulas, sort of like cutting out the middleman.
So let's understand that these codes, regulations, whatever, are there as protection for the people and/or institutions that rent them. These might include certified insurance, fire codes like fire escapes and fire extinguishers, limits on the number of people allowed in buildings, and on and on. It's a matter of accountability and yes, liability for the property owners, and in so many ways protections for the people renting these out.
It simply isn't fair that the below-the-radar airbnb's cal elude these features and of course pocket the money that obeying these regulations would cost to provide.
68
@TH
For those reasons and others I would never use AirBnb (or Uber or Lyft, or Amazon, Whole Foods, etc. etc.). It is not a law that you have to accept whichever purveyor offers the lowest price. Legitimate business owners deserve better from us than a lemminglike approach (which will end up with all of us falling off the cliff).
4
Excuse me, but if you are charging 10K a week for a rental house, you must be turning a hefty profit. So, you are fine gouging your customers with exorbitant rental prices as long as all the money is going to you? If no one is booking, adjust your price accordingly. Paying taxes is patriotic. Let’s get back to contributing to the well being of our communities rather than simply lining our pockets.
139
@Christine If the house costs $2.5 million, plus association fees, plus real estate taxes, plus hurricane and flood insurance, $10,000 for a prime summer week is probably just breaking even.
11
@Music Man if someone can afford a 2.5M second/third home I don't think he/she is worrying about renting it out for a summer week. If he/she is it just means he/she made a very poor financial decision.
27
@Music Man
Also, these rentals are not year round, but rather 6 months (if you're lucky due to good weather). Owners also endure other costs as well - maintenance, utilities, housekeeping, repairs, additional homeowners insurance because of guests, etc.
No doubt the home owner is doing better than breaking even, but there is a huge expense to owning and maintaining this type of rental property.
I just think both sides of the story should be shared if for no other reason, a balanced point of view.
6
We like to spend winters, Jan-Mar, in Florida. Short-term rentals here are taxed at 12% and people using Airbnb or VRBO pay the tax.
I suspect that the reaction to the tax in NJ is because of the jump in prices. Once it is internalized, it will become part of the landscape.
Florida does a lot of things to make visitors pay the cost of services. As a NY resident, I don't like it, but it seems to appeal to Floridians.
83
@Betsy S - Hi. You really cant compare FL and NJ. its like Apples and Potatoes. FL: no income tax, low property tax. NJ, Income tax, high property tax.
I used to have a rental in FL. way cheaper.
Citizens and government go to war, while Airbnb—who cause havoc in cities by removing housing stock in like San Francisco and NYC—goes unscathed.
Airbnb's model works differently in different areas.
In some redeveloping communities it can indeed be a revenue source for the middle class.
But in places like NYC, SF, and the Jersey Shore—which over the last decade has seen a pronounced shift from middle- and working-class ownership to the urban 1%—Airbnb just ensures that the rich get richer.
Seems to me most of these landowners can swallow the tax or split the savings with renters. How is it the rich end up the victims in all this?
More crocodile tears from the poor oppressed techies and and the rich. Please spare us...
5
AirBnB has been a nightmare for people who actually live in these established neighborhoods in New Jersey, Florida, NYC, everywhere. People coming and going, new neighbors every week. Here in Naples, FL Collier County is considering outlawing short term rentals, and they should be outlawed. Why should I be concerned about the livelihood of some guy who wants to own 6 properties and rent them all out to the detriment of the neighborhood?
7
Lower your rental rates to cut the tax in half.
4
Oh please... You can spend $2400 for a rental but are turned off or way by a couple of hundred in taxes? Stuff your anti-tax politics in your whale tail and pony up. Stuff costs money and all you’ve been doing is free riding while the rest of us pay for your fun.
6
I'm really weeping for the guy with seven properties who typically grosses $30k per week in the summer. Hope he can scrape by.
14
Yup, tax it, tax it, tax it. NJ is desperate for revenue to cover all of the ill-advised generosity to state employees, expensive mini-towns that insist on their own governments and schools, and general wasteful ways. They are absolutely unable to run this state economically and our elected officials are too weak to get the Feds to give us back our fair share.
For those saying that these Airbnb folks are 'running a business,' remember, they are already paying yuuuuuge, non-tax deductible property taxes on their houses and non-tax deductible income taxes on what they make. I assume that they also have to pay a regular sales tax on the rental too.
NJ has been a great place to live and raise my family, but I have my exit planned. One day, I picture a group of sad-looking politicians standing around with a dead golden goose lying limp in their hands. That bird could only stand so much choking.
2
Sorry folks but taxes are a reality. Ridiculous that people would protest an 11.6% tax on short term renters. (Esp.when cauliflower goes fo $6 a head.) Hotel taxes are often horrendous. No one goes to Palm Beach in the summer or rather the water at Myrtle Beach was way too warm in August and there's the cost of getting there. BTW many of these rentals are too high and maybe the landlord should consider a tax included pricing!!
I am so suspicious of this type of editorial / thinking. Better a congestion tax an the (now defunct) commuter tax? (I don't think so but apparently that's OK?)
2
@Anna so people dont go to Florida in the summer? Really? Destin?
If you can’t rent your shore house it is because the rent is too high, the place is a dump or you are too far from everything
Air BNB has made family travel more affordable and now there are a lot more choices. If you want to compete - clean it up.
Every year we stayed at a place in cape cod that had an amazing location but the place was s moldy dump and we had to bring Everything - including toilet paper, kitchen gear, sheets - all of it
Now we have many choices
5
When people buy buildings to create illegal hotels and B&B's, it is not a "homeshare" program. First regulate them, then tax them. As for the Jersey shore. Time to open it up to everyone.
6
this is nonsense. nobody is cancelling a vacation to the jersey shore over a 11 percent tax. it's the economy stupid!
3
It’s a pretty simple case of supply and demand. Either landlords will have to lower their prices or renters will have to pay more. Business may lag for some time until both sides adjust. Short term rentals have created a lot of problems where I live in the Pocono. People rent houses for parties and 200 people show up and raise hell in the neighborhood. It has been ugly. So there’s more to it than dollars.
2
another story about stupid selfish people. if hotels are taxed, then airbnb should be taxed.
6
New York and New Jersey. Democrat havens of high taxes. This is why you dont vote Democrat. They'll squeeze every penny out of you for governement corruption.
2
I could have sworn the governor of New Jersey for the past eight years until Dec 31 was a very prominent Republican. Maybe I’m mixed up and Chris Christie was really not a Republican who led the Trump train into his transition.
5
How’s that GOP MAGA tax cut-caused budget deficit going?
Hear that’s now a big worry again for the “fiscal conservatives” after y’all took care of the “stockholding class.” Time to look at MEDICARE CUTS AGAIN!!!
And yes, I’ve been informed time & time again by Team Trump that 99% of stocks are held by the POOREST 1%, so obviously, those in need benefited the most....
I grew up in NJ and a big part of my youth was time spent at the Jersey Shore. Our family would pile into the car to go to Belmar or Spring Lake for day trips, but the real treat was a week or two at L.B.I. We didn't have a lot of extra money, so the ability to rent a house, have access to a kitchen and split the cost with my aunt & uncle enabled my parents to give us a nice little summer vacation. I'm 45, so we were doing this all through the 1980's, long before any "sharing platforms" existed. Short term rentals are part and parcel of the Jersey Shore. The government needs to butt out.
2
If just an extra couple of bucks sales tax on the room is enough to cancel a vacation, it was not a financially viable vacation anyway.
The tourist also had no money to spend, and so no economic benefit to offer where he visited.
This so-called effect seems exaggerated. Perhaps the problem of people not coming to vacation is deeper than just the sales tax.
6
It's amusing to read the posts of those who drive on State roads to their second beachfront homes that are protected by a myriad of State funded services - police, fire, courts, dunes, schools, ... all of the services that make NJ a place where people want to live and vacation, and then whine that they no longer can dodge the tax system that everyone else has to live under.
5
It is notable that there an exemption for realators which is the traditionalway to secure a shore rental. Maybe the law was designed to encourage transacting with the local realtor instead of some Internet platforms. These are small towns after all that depend on local businesses. I don’t think that is a bad thing.
2
Here in Texas, the "no income tax" state, there is a Hotel and Occupancy Tax (fondly known as HOT). It applies to any rental under 30 days, whether a hotel, B&B, or AirBnB. Most sites collect the tax for us, but the ones that don't, we pay our 6% to the state. Local towns and cities can raise that rate to almost 15%. Unfortunately for Texas, 92% of the HOT goes to the general fund, and only 8% to tourism. The issue we have is that Texas continuously cuts taxes to businesses, but has to raise taxes somehow. It's why we have high HOT in some places, and high property taxes all over. The money has to come from somewhere.
1
This little dust up might just make for a long overdue conversation about grossly excessive tourism taxes. Taxing authorities have had a free ride for ages charging 10-20% taxes on hotels and rental cars because the person paying likely wasn't a local and wasn't going to fight the tax. Their unhappiness with AirBnB is that it made it harder to get all that easy tax money.
In New Jersey's greediness, we NOW we have many, many locals who are being forced into collecting and paying this obscenely high tax to their state or locality.
I think a reckoning may finally be coming.
1
I suggest that if homeowners want to keep full, eat the occupancy tax. The price that they charge is a bit expensive.
8
Yes--any new tax is divided between the two parties, eventually. Just like the tariff discussion. Would have been interesting to hear what academics conclude the tax "incidence" is between renter and owner. Wait, there's google. Tax incidence of 6.2--$6 of $7 paid by tourist and $1 paid by hotelier--1993.
1
C'mon - this is being led by the realtor lobby. Note that rentals done through a broker are not charged the tax. Are the services they provide any different from AirBnB, other than being less efficient?
Effectively, this lobby has said,"well, if you're not going to pay us, you have to pay the government."
3
This is taxation on taxation. Property taxes are paid by the owners with revenue received from renters. How much is enough?
2
Hang on. The first AirBnB owner quoted in the article "owns SEVEN properties that he's been renting out since 2010," including one home that rents for $10k per week. This is not "home sharing." This is purely a business, and a significant one at that. Why shouldn't his business be subject to a rental tax?
42
@mm And as a business, he needs to price competitively. There is nothing stopping him from lowering his prices or rebating the tax to his customers.
11
We can crack down on AirBnB and that’s a good thing for many reasons. However let’s not forget that there are many foreign platforms (no doubt a couple of Chinese ones) we have not heard about that provide the same service. Any law or tax that relies on AirBnB’s own reporting is flawed because it will miss these other platforms: how will the American taxman capture a transaction from say a Russian owner to a Chinese tourist? How cooperative would a Chinese platform be when it has the support of the Chinese government (and hence of Chinese law) because it is a competitor to American platforms?
4
So prices will have to be adjusted because of the new reality and people operating a small hotel are no longer exempt from the taxes? Sorry, not sorry.
18
@Véronique
No kidding. Poor guy is complaining his $10,000 PER WEEK rentals may be affected.
Boo, hoo.
6
We live in a small, cramped lake community on the western edge of the Pocono Mts. in NEPA. We are also facing the AirBnB problem.
It results in large groups of people renting a house, being loud and disruptive at times, parking multiple vehicles on our narrow roads creating congestion. All this so some company, which is actually is no more than a computer program, can make billions and some absent investor can make thousands.
21
@JKile
While I completely agree with you, your post reminds me that it's not just about AirBnB.
For years, homeowners have made it so expensive to rent a place for a week (check out the guy who has one going for $10,000 per week), that is it any wonder that folks have to pull a group together in order to afford to rent FOR JUST ONE WEEK in the first place?
Greedy homeowners, parasitic AirBnB - a match made in heaven.
4
Many of the owners of short term rentals have refused to accept that they are, in fact, running a commercial business. It's only fair that they be taxed as such. This article skews the core issue: that cities, towns, and states have to keep up with the infrastructure that is needed from this new industry. Let's take Breckenridge, Colorado, where I live. Short term rentals have decimated our small long-term rental market. Where before the rise of Airbnb/VRBO, locals could find expensive but doable long term rentals in town. Now, owners are turning to short term rentals because of the short term financial gain and kicking out long term rentals. The Town is building affordable, deed-restricted, local housing as fast as they can get in the ground, but it's not enough to keep pace with the loss. The Town is even looking at restructuring their water system because of the new demand from short term rentals. Taxing these properties is only fair to make up for the infrastructure they use and the housing they displace. So please, think of the people serving you in the restaurants where you're visiting and happily pay the tax.
36
Meanwhile, there are huge cash-pay labor black markets and cash-pay long term rental home markets in this country.
But, it's easier (or more satisfying?) to go after the W-2 taxpayers who want a local beach vacation week.
1
@SamRan
Unfortunately, to be effective, you have to go after the johns as well as the pimps.
2
We should just end state governments. We don’t need federal, state, and local governments, all who mismanage the money they receive and think the only solution is to increase taxes.
3
The state of NJ will tax ANYTHING it can identify and having Murphy as governor is like pouring gasoline on a fire. Regrettably, the political machine in NJ can get anybody elected short of a dead body (ie Robert Menendez) and the only certain result will be a mass exodus of wealth to no or low tax states. It is already happening and will increase quickly in the next few years. The political class in Trenton will have “wonderful”ways to spend money but no one left to pay the taxes to fund it. NJ, NY, Ct, and I’ll are all in death spirals and are in a race to see which state will try to first achieve bankruptcy. Living in NJ is like being in a slow-motion train wreck. I, for one, am getting off as soon as possible,
4
@ Mark in nj. Bye. God luck in the eden of the next state which you grace with your presence.
Wow, what a tonedeaf position the homeowners are taking! The landlords just need to pay the tax, baking it into the price, and be happy the government isnt banging them for 11% tax they haven't been paying lo these many years! Duh!!!
18
Jersey shore properties owners have always been the biggest crybabies. They complain about everything and continue to soak the poor and middle class renters. Where else in the world do you have to buy a badge to sit on the beach???
15
going to Florida instead of the place you love over a $280 tax makes no sense. Me thinks they do protest too much.
23
@scott Me thinks it’s cheaper to go somewhere else. You assume the tax is only $280 and that families don’t have budgets. Get a calculator and do the math. Cheaper off season down South than high season at shore. Ever hear of airfare included, all inclusive trips? It is a very competitive area. You may want to look into it.
1
@Sam
Yep - these are families on budget. They are flying their entire family to Palm Beach for a beach vacation with their last saved pennies.
Someone who can afford a vacation where the rent alone is several thousands a week can easily absorb a 10% tax.
8
@Sirius. Not so fast. You assume much. Ever hear of airfare included deals. Travelzoo, Travelocity? Not everyone is wealthy. And if people take their families elsewhere because the tax and fees make it the same out of pocket for nicer water, no housecleaning, etc. then so be it.
Treat AirBNB like a hotel? Then pay Hotel-type taxes.
10
Not sure why the author uses the term “home” and “home owner” continuesly in this article. This short term rental industry has grown far beyond it’s original concept of home sharing.
22
Right a 11.7% occupancy tax is going to kill the market for vacation rentals!! Are you kidding??
8
Let's call a spade a spade. Your language in the article is inaccurate and plays into AirBnb's marketing playbook. It is not "home-sharing." It is "renting out your house." This is done not through a classified ad in a paper or notice on a bulletin board in a laundromat. The internet middleman in these cases makes lots of money. The definition of "sharing" does not mean that there is an economic transaction but here there is. It is not "sharing." It is simply capitalism. Please read some George Orwell. Language matters
27
Many Air B+B operators have operated entirely under the radar, claiming nothing and paying zero tax..A new tax regulation will force these operators to declare their total income from sales.
I believe this is why they are so vehemently against it.
19
God forbid we tax the one percent of the one percent, but going after poeple who can't afford hotels -- ordinary people -- is just fine. Our politicians have the strength of slugs. All things popular with people -- air bnb, medicare for all, good infrastructure, a lower defense department budget and stronger social safety net -- are just too radical for the slimy slugs we call leaders. Bill DeBlasio for president.
2
people hate paying taxes because they believe the revenue funds people other than themselves because of racism
it really is that simple
1
Interesting as to how the Real Estate lobby had the tax waived for the consumer when renting through a realtor. If it was designed to be fair to hotels / motels then this waiver would not exist.
19
The State of Florida, obviously a very popular tourist destination, puts a 6% state sales tax on short term room/home rentals and the counties add another tax, typically around 6% on top of that. I'm sure other states with tourist driven economies are the same. Is NJ asking something out of the ordinary?
15
@Rob D
New Jersey has the distinction of having the highest property taxes in the nation, among the highest income tax rates in the nation and included in the highest cost of living in general. There should be at least one consumer friendly statistic we can point to. This tax is paid is paid by those who wish to vacation in NJ and thus support the local economy's which are heavily dependent on seasonal tourism.
2
@Tim NJ should be allowed to take advantage of tourist dollars spent just as much as any other state. You are on LBI where I'll bet a great number of the short term rentals are residents of Pennsylvania. The tax is not a penalty on the property owner. I believe the slow market will be temporary and the taxes, while a shock now, will be later forgotten.
1
Owners should lower the prices on their rentals to offset the taxes. Problem solved.
20
@Paul Cantor
Exactly. One owner is claiming that people are canceling their rentals, forfeiting deposits, due to a 10% tax. Why would anyone cancel and lose their deposit to avoid a tax? I mean how soft you have to be on your math to do that.
9
@Sirius That and the "we're cancelling our vacation plans and moving the vacation to another state because of a 10% tax surcharge being applied that should have been applied on these rentals from the start" sentiment are pretty hilarious parts of this article. Smart travelers would be considering the total cost of a rental, yes - but this article makes it sound like the vacationer(s) decided to make vacation plans in another state out of principle because they objected to that state properly recognizing that it made sense to consider STRs similarly to hotels/motels in terms of taxation out of fairness.
5
@Paul Cantor Problem created. Not enough revenue for maintenance, operating costs, screening tenants, etc.
1
Fewer rentals will likely lower the value of shore houses so these owners can make it up by challenging their property tax assessments. With the new taxes on shore vacations, pied a terre, soda pop, etc., I wonder if government services will improve?
2
Property owners can lower the price to fill their rooms, just like any other business would when subject to new taxes. The tax burden is thus shared between buyer and seller.
24
@Thomas Bruggink the overheard to keep anrental in tact year to year with the wear and tear from groups is very costly. The extreme weather we now are faced with almost doubles or cost now. Not only does the house take a beating, utilities have gone up, our vehicles to go out a get materials for upkeep ( hone depot run weekly) takes a beating from salt water flooding. Nothing lasts in salt air. It is a constant drain of $. I try to keep our home ready and in top shape for our guests. We love sharing our home and hope we can continue renting.
4
@Mary Ann Gutchigian
Mary Ann, if sharing is not profitable, shouldn't you stop?
3
The tax on the $1650 rental is $134 or $19.14/day. That’s really good ink t. Abuse someone to go to Florida rather than the Jersey Shore? Someone is being disingenuous, I suspect
10
@Andrea Rathbone $1650 in what month April? Look at rates for July and August. Not all who go to the shore have a ton of money. You assume much.
For the landlords upset by the new tax: I'm upset that I'm subsidizing your flood insurance, so we're even.
78
@Tim The coast is not a repetitive loss area, so you are not subsidizing their costs.
1
This is not a big deal, I don't have a lot of sympathy for the for these people making these extraordinary rents each week and not paying tax on them, time to pay up, they should know that there are no free rides in this country.
Here's a tissue for your tears
36
The tax should be the same as hotel room taxes.
Once again you have a bunch of people playing victim because they can't make as money as they would like.
61
No one ever said it was easy living in the first world.
12
Tourist tax is 12% ( 7 and 5) in Sarasota FLA; this never stops seasonal renters from coming. Get used to it people.
14
Yet again, governments see a potential source of revenue, but don't see the consequences of it. Squeeze that grape dry! they think!
But what happens is consumers go elsewhere. The Bahamas looked to impose a HUGE cost on bone-fishers, that you HAD to have a certified guide at $500 /day, even if you were within walking distance of a bone-fish flat! What happened? Rentals began to dry up as fisherman went instead to Turks and Caicos, and Cuba, where there aren't such fees. The Bahamas backed off on that simply imposing a slight fishing license fee and rentals picked up again.
Nobody thinks about how much the rentals pump into the local economy WITHOUT a tax. An empty house doesn't use much municipal electricity, public water, nor do the local merchants and restaurants get business, whether it's the gas stations, the grocery stores, the souvenir and beachwear shops, the restaurants, etc. And every transaction THERE would generate sales tax.
I'm sure there are all SORTS of other transactions that are lost when renters go elsewhere.
Yet, somehow, governments constantly and consistently forget the classic fable about the greedy farmer who owned the goose that laid golden eggs. Thinking he could get ALL the gold at once, he killed the goose and cut it open, only to find all he had was a dead goose.
"Killing the golden goose!"
3
@Dadof2 it's pretty well only democrat govt's that do this.
1
@Dadof2 The government is not short-sighted: the AirBnB owners are. They just haven’t realized that if they want to maintain the same demand when the cost to customers increase, they can’t just maintain the same prices. If they don’t want to lower their prices and get empty houses they only have themselves to blame.
Besides, the idea that you shouldn’t tax something when it brings other tax revenues is quite silly: you could argue for the removal of pretty much any tax this way, from sales tax (consumption funds businesses) to corporate tax (businesses pay people who pay taxes) and even income tax (people patron businesses with their income).
6
No more Airbnb for me. After two tries, I give up. The photos are deceptive and the rentals turn out to be well worn and the landlord does not care.
6
tax the hedge funds at ordinary income tax rates and stop taxing the mom and pop businesses
5
@anonymouse
But sharing your home is not a business. If it is then a 11% tax is still less than the hedge fund are taxed. So what are you complaining about?
1
@fxt If you live in the house/condo/apartment and rent out a room, that can be argued as sharing your home. If you live somewhere else and rent out an entire home, that is a lodging establishment. The "sharing economy" is a misnomer if there ever was.
1
@fxt they're taxed 11% and then they pay income tax on top. Or am I missing something?
Florida does this and it is why they don’t have a state income tax.
New Jersey and New York should tax all non resident home owners and vacationers to support our states and relieve some of the burden of infrastructure and school spending
3
@Deirdre Florida taxes homesteaded properties at a lower rate and caps annual increases. While well-intentioned, this creates an undue burden on non-homesteaded properties. In effect, long term renters pay a much higher share of tax than homeowners. It's a highly regressive tax system.
What makes a tax on second home owners "regressive?" Second home owners are generally richer than people with only one house. A tax on second home owners is very common and quite progressive.
Since when can someone tell you who you can have as a guest at a private residence that you own? What’s next applying a tax when your mother in law comes to stay with the grand kids? It is time the government learns how to live on a budget let the rest of us.
2
@Tim
No one is telling you who you can have as a guest. Pay attention to what the article says.
6
@Tim - Seriously? Do you really not see the difference between a guest and a paying customer?
4
How, oh how I plead, did the Jersey Shore, Cape Cod and Manhattan ever survive as viable tourist destinations before the sharing economy existed?
This is an issue of greed to an extent and an investment property economy that can’t really support the overbuilding and leveraged investing used to get trophy properties.
I’m sure the bed taxes on hotel and inn rooms helped communities pay for the infrastructure and services needed to keep a vacation economy humming. We didn’t stop going to X ski area in VT because the hotels charged us a hotel, occupancy or bed tax.
Just look at the boom in rentals in Lake Placid, which are beginning to stagger the economy of this historic village of 2,500 or so residents. Housing going for exorbitant amounts, taking them away from the local market’s price range, turned into rentals by distant investors. Large groups invading the homes, never leaving for the duration, instead preferring to drink and dine at home. But they still need plowed roads, EMS, water and sewers ...
If people can afford vacations and luxury properties, then they can afford the tax. If these properties “no longer work” because of a tax on them, then they were risky speculative investments incorrectly built to the fringe of what the economy would support.
30
@MitchW Yeah, if ya can't afford a vacation - don't take one! They're really only for the wealthy anyway.
It’s not fair to exempt rentals through realtors. Any tax should apply uniformly to all rentals —across all “channels”.
The exemption of realtors makes this look like a crooked law.
27
Come to Delaware! Lewes, Dewey Beach, Rehoboth! Plus we have tax free shopping and lots of outlets! Great restaurants too!
4
@ANN I did that once. Meh. Asbury Park/Ocean Grove/Bradley Beach are better.
Funny, it's the same ocean - but it's a different vibe.
The people who are whining about this tax are probably not reporting the income from the rentals.
24
The article states " The 11.6 percent tax applies to all rentals fewer than 14 days," its actually stays of 90 days or less that the tax is applied to.
1
No reason the tax on a vacation rental shouldn’t be the same as the tax on a motel room.
I have a hard time believing people are canceling plans to rent an expensive beach rental because of an occupancy tax.
16
A tax goes into effect, and a guy is 25% behind his usual bookings.
Post hoc, ergo propter hoc.
How about considering the possibility of any other reason? The limitation of state and local tax deductions kicking people in the financial nuts? The economy is slowing down? People see a recession on the horizon and, hopefully, are actually planning ahead? Maybe he jacked his prices over last year, and isn't talking about it?
I agree with the commenter below - an extra $500 on a traditional $5K splurge isn't enough to derail a family plan.
35
Rentals made through realtors are exempt from the tax. A group of owners or (maybe AirBnB/VRBO, etc) needs to make an arrangement with a realtor to bring him or her their 'referrals' and have them confirmed through their agency. It should be worthwhile for the real estate broker to lower their commission to say 1 or 2% since all they will be doing is handling a little paper work, and they will get a huge volume of rentals.
2
@DJR Sounds like the Realtors have a very effective lobby.
So let me get this straight. Someone is well off enough to spend 5000 bucks on a cushy beachfront property. But if they have to pay tax (like everyone else does) on their vacation, in other words, tack on another 500 or so, and all of a sudden THAT'S too much, and you're going to either drive 500 miles to Cape Cod or spring for a ticket to Florida?
Something is fishy here.
112
@Jack from Saint Loo...Exactly....Many of the renters don't want to be identified or registered.They are keeping all the monies,
unreported...They also don't have to recognize local zoning lodging laws.
24
The Landlords are not listening to the market. People are not renting because the rents are too high. Cut the price by 11%; pay the State tax; make a little less.
36
I have had a rental property on VRBO for five years and have paid my local occupancy tax to the city and tax to the county. While I don’t begrudge those taxes as they help the local economy with street repair extra police etc. what does bother me is the fee collected by VRBO due from the renter at the time of rental. They tell me it is an algorithm. On the same rental price per week the fee can vary by as much as 10%! In the past they charged a flat fee to the renter through their yearly membership, all for the pleasure of providing the platform. But on the other hand I couldn’t rent without VRBO providing that platform.
3
It's about time that we crack down on the "sharing economy" where global internet companies can gauge local communities out of their resources without having a good chance fighting back.
28
From the article: “Though it has frustrated renters and homeowners, Airbnb frames the tax as official recognition of its legitimacy, putting the company on equal footing with the hotel industry.”
If Airbnb wants to be on equal footing with the hotel industry, they should pay the same taxes. In addition, how about subjecting each property to the same health and safety regulations and inspections as the hotel industry?
15
I recently booked a home during the summer in Santa Cruz, CA, where there is a strict 31-day rental law. I rented through HomeAway.com. The cost is significantly less than some of the weekly rates x 4 on LBI. Since the tax only kicks in if the rental period is less than two weeks, perhaps owners ought to offer a discount to renters who stay 15 days.
4
Rentals are not keeping pace with previous years and, of course, some highly visible entity is being blamed, so, Sandy has been replaced by this tax. But has anyone considered that this development might be a precursor of an economic downturn? Hummmmmm.
6
The question is what is the tax rate and what is is replacing? If you normally paid a 6% tax at a hotel, why would you pay an 11% tax at an alternative? If the tax rate on the hotel was 11% ( which is ghastly ), then there is parity. The problem with these new industries is that they have had a sweetheart period where they have been able to operate in a vacuum. Not that this is wrong or right- it just is.
Fundamentally it comes down to how taxes are assessed and more importantly how they are uses- or perceived to be used by the tax payer. It is all what value is the tax payer getting? I would venture that in almost 100% of all cases, people are highly dissatisfied with the amount of tax they pay versus the services they see they are receiving from government.
Millions and millions of dollars are spent- mostly by interested business entities to get people elected who tell the general electorate that they will improve the lot of all, and then nothing happens except taxes and fees go up.
No one "likes" to pay taxes, but we see the need for them. We just want them to make sense and actually to be used for what they are supposed to.
4
I really don't feel sympathetic to beach landlords. They've been tearing down affordable and practical rental housing in prime beach locations for years. They replace the old units with built-up McMansions that can fetch a $5,500 rental price. The old place went for $800 or less. Meanwhile, the construction destroys the neighborhoods and views for blocks around. These are not people I feel sorry for.
Owners are charging prices the markets won't bare. The tax simply revealed the underlying market. A 10 percent hit on your profit margin and you're underwater? I doubt it. Owners need to lower their prices in order to get the bookings. They can edge prices up later. If they choose not to absorb the short-term price adjustment, that's their problem. They'll end up renting at a fire sale price later.
77
Why does this article focus pretty much exclusively on the perspective of people who lose by this tax, as opposed to those who are losing as airbnb takes over the world?
I recently endured a plunge into the Brooklyn rental market and was shocked (but not surprised) to see that long-term rentals for residents of NYC are, per night, nearly as expensive as airbnb's nightly rates for short-term visitors in many locations. Think about that for a minute.
There's a very real problem caused by airbnb for those of us who aren't property owners or vacationers. The NYTimes should not cover those who lose by this tax without also covering the many more who are losing as our cities get hollowed out by a "sharing" economy that only benefits a (usually wealthier) subset of the population.
44
@ae Airbnb, like Uber, is all too vulnerable to the profiteers, the takers in the "sharing" economy.
1
Are we supposed to be sympathetic to a business model that apparently relies on non-payment of tax in order to succeed? That goes for both the landlords and Big Tech (which seems to follow the alleged playbook of Big Tobacco: keep prevaricating in the face of evidence of the destructive, anti-social consequences of your products).
50
Maryland's Ocean City has long had a short term rental tax.
A 6%sales tax, plus a 4.5% lodging tax.
On top of any fees paid to a realtor.
There is also a license fee. Inspections.
You have towns that quintuple in size during the season, needing equipment and personnel to handle that surge that sits idle the rest of the year, in salt air.
Realtors seem to have written Jerseys law to insert their fees instead of a short term tax.
6
The article implies that this tax has affected the early booking of rental properties.
I own rental property in Montauk NY. and have seen a similar phenomenon, and it is not due to a tax.
The days of having a property completely booked a year in advance are over. Today many people realize that you actually pay a premium to book in advance for rooms or airplane seats. If you wait, sites like Travelocity, Booking.com, etc. will offer lower rates as you get closer to the date. Property owners would rather take a lower rate rather than have a unit sit empty; even with the percentage that these travel sites take.
Another thing I have noticed is that fewer people will rent for a whole week or two. Many people seem to prefer taking several shorter vacations rather than one long one. Many people actually feel guilty taking too large a block of time away from work. The only exceptions to this seems to be if the travel is to a very distant place like Australia.
These changes are a result of the Internet, and societal changes at large.
26
I've read this piece twice and still don't see where its pointed out that the 11% tax is paid by the renter and not the owner. That is the rub. I've been vacationing on the shore for 30+ years and would hate to give it up, but rental prices are already higher than ever and yes, the 11% surcharge hurts. I'm hoping that the owners stick with using the local realtors. Perhaps they would if they were the ones paying the tax.
2
I don't see why all STRs shouldn't pay the same tax as hotels or motels. No more, but no less.
20
As I understand it, this "AirBnB tax" puts these types of rentals closer to the same footing as hotel taxes in NJ - 6.25% sales tax and 5% occupancy fee (11.25%). In addition, some NJ municipalities may levy additional hotel/occupancy taxes. I'm not sure why realtor listed properties are exempt.
At issue, I believe with the shore communities is that many of these homes have been rentals long before AirBnB came into being. Perhaps the tax should have applied even then.
In any event, I like the convenience and quality of Airbnb accommodations. I like vacationing. I accept that the taxes probably should have been applied from the get-go, and that I would pay them in a hotel, so I should also pay them for a short term rental. I can still get a less expensive vacation with AirBnB than staying in a hotel where I have to also purchase all my meals and in restaurants.
14
This is what Europe is doing to pay for all the costs associated with tourists, so it is just coming here now. If we travel there are costs associated with it. Then pay for a hotel room if you don't like the Air costs.
17
First of all. The home owners stop using realtors as they had to pay a fee. So they switch to AirBNB to avoid the fee. Now it is back but charged against the renter... Obviously benefits realtors. but as people have stated below LBI and most of the Jersey Shore is not cheap anymore. After Sandy it was a free for all to buy homes and even in this article the one person owns 7, yes 7 homes! That is easily $3.5M in property alone. Just maybe with the delay with taxes and changes on the tax returns people are waiting longer for big purchases?
6
Stop whining. If 11.6% is the difference between renting or not then simply lower the rate to offset the tax, or offer some other amenities. Everyone had to know this was coming so adjust your marketing.
Sure; your net will less but certainly not as much if your property sits vacant.
38
@Jeffrey campbell Thats a pretty big additional charge to potential vacationers whom can look elsewhere to travel for their vacations. Direct service flights from NYC and Philadelphia to florida and the carolinas for less than the tax amount mean that owners renting their property are facing serious competition from a destination vacation at the same or less price.
3
@J. Smith Exactly. There are deals everywhere. Cruises, all-inclusives, they are everywhere. Adds up to be the same when airfare included. People writing in comments about the tax not being a big deal just don’t get it. It is. And will ultimately push people to other destinations.
@J. Smith. Why should the homeowners leech off of everyone else? Hotels and motels have to pay the tax, how are they different? Why do they deserve an unfair advantage?
There are two ways to deal with an 11.6 percent in price at a favorite vacation spot. Either the owner can drop the price or the renter can eat the increase. The renter also has the option to shorten their stay. Any of these options would bear more fruit than sitting on the porch and whining.
13
Or lengthen their stay, as the tax drops to $0 on Day 15.
I understand the reasoning behind the Airbnb tax but that doesn't mean I have to like it. I remember when some airlines starting charging for luggage and all of the other added costs. I don't like that either.
But the real bottom line for me is when my husband and I decide to take a trip, all of those "added" costs are part of the overall expense of the trip. We muddle over what's more important - taking the trip or staying home because we are annoyed at the added costs. In the end, we always agree that if we can't or don't want to pay those added costs, then we have no business going on a vacation.
I think what really annoys me the most is the feeling of being insulated and the appearance of being taken advantage of so blatantly. Why not just raise the overall price of the rental or airfare and take the added tax out of that amount? At least I would feel less insulted for being charged extra for a lousy piece of luggage that I used to take for free.
9
@Marge Keller The tax itself is based on the total rental price so 'adding it in' actually makes the tax go up.
1
@DanO
Oh dang. good point.
Well there goes my entire silly theory right out the window.
And this is why I wish we had the option of pulling our own comments.
Good catch Dan O.
1
@DanO
Just dawned on me - a higher price could be listed that stated, "taxes included." And then again, maybe I'll just fade away into the sunset.
1
I am having a hard time that someone paying $2,400 for a week at the shore is deterred by a $280 tax. (Please point out to temporary renters that tax monies pay for things they take for granted but would be very upset if they weren't there - street lights, paved roads, safe drinkable water, police, firemen, etc) We recently rented a home in Seattle and the taxes added on by airbnb's auto billing were 25%. (way higher than NJ's) Do people think government services are paid for by the tooth fairy?
90
@MGA
Hate to say it, but Yes.
They do think they shouldn't have to pay taxes for things like "society".
Re. Ms. Hiller, how can a tax of 11.6% per night make a trip to the Jersey shore more expensive than going to Palm Beach. What about the cost of transportation for her and her 4 daughters to Palm Beach vs. driving 2 hours from the Philadelphia area to the Jersey shore? I'm not defending the tax, but there's no logic here whatsoever. Obviously, this tax is not the deciding factor in where she chooses to vacation.
62
@Eddie this is Ms. Hiller, when you are spending $4,000 to $5,000 for one week for a house, plus the tax, spendjng money, and other incidentals, that tax cuts into that. Guess you never looked at how much it actually costs to rent there. Going to Florida is the same money.
4
@Susan If “going to Florida is the same money”, and you love the Jersey shore so much, then why are you going to Florida? It doesn’t make any sense.
5
@DKM. I posted the same comment. Makes no sense.
The same thing is happening in MA. In addition, realtors are now listing many rentals and are charging their own "service fees," which had another few hundred dollars. So rentals are way up unless a sensible landlord doesn't tack on fees.
1
We owned a property in Door County, WI for years that we rented on a weekly basis, sometimes on a weekend basis. This was in the early 2000s. Tax was 11% (5.5% sales tax plus 5.5% tourism tax). Why is this an issue in NJ?
That said, our governments never met an idea or business or consumer they didn't like to tax unless it is a large publicly-traded corporation. So the little guy loses again.
14
I have always been amazed at the contortions Americans will go through to avoid paying any tax on anything. I guess street lights, pavement, beach cleanup, police, fire protection, etc. should be done for free. I think that if someone has a number of rental houses with the minimum going for $1,650.00 a week, that a $200.00 rental tax wouldn't add a significant amount to the cost.
76
americans are self absorbed. its in the nstional conscious. it shouldnt be a surprise.
1
@steve talbert I said "amazed". I'm really not surprised.
This is a prime example of how government does not work to regulate business but more often works hand in hand with business. The hotel industry (which is subject to the hotel and occupancy taxes and whose hotel rates are being undercut by AirBNB rates) and the local realtors (whose rentals are not subject to the hotel and occupancy taxes but whose rental agency fees are being undercut by AirBNB rates) both run to the state legislature to pass a tax that hits AirBNB customers but not their own customers. The state legislators think this is a great idea. They get more tax revenue to spend and they get campaign contributions from the grateful hotel operators and the realtors. What's not to love about that!
7
Politicians love these rental taxes since generally they are seen as paid by someone who isn’t their constituent.
6
In North Carolina short term rentals are required to collect both a sales tax and an occupancy tax. We have a condo on the Outer Banks and another in the Boone area which we list on Airbnb and Homeaway. In both locations the sales and occupancy tax total 12.75%. This is the same tax collected by motels and hotels. It would not be fair to require one type of short term rental to collect the tax and not the other.
101
@John Purifoy
Here in California, I pay $12,000 in property tax (small home), plus all sorts of bond issues, plus 10% on the gross, not net, of my vacation rental. (What that means is that when I bill my guests the $120 that my cleaning crew charges me, the city bills me $12 in tax on the transaction.) You may chuckle, but it does get old...
@Bill I'm not a CPA, but I'm pretty confident that what you yourself paid for that cleaning crew would be fully deductible against the earnings from your vacation rental. So I'm not sure I understand what your specific objection is here - no one is forcing yourself or anyone else to conduct economic transactions as a small business-haver, and those who conduct economic transactions as a part of their small businesses have those transactions taxed to help support essential services (and meanwhile, your property taxes help support local schools). I'm looking at starting a small business, and I recognize that the costs, taxes, and fees associated with doing so are what help to support the city, state, and country I live in.
If what you're really trying to do here is to make an argument about "fairness," the "how are motels and hotels taxed?" question seems like a good starting point in this instance. Do you think your vacation rental is unfairly taxed vis a vis motels and hotels in your town and city?
4
My family has been renting our beach condos in Orange Beach Al on VRBO since 2007. We have collected taxes since we began.
That is currently at 11%. We are totally booked for the summer.
57
What Ms. Hiller does not realize is that on top of the Palm Beach County sales tax, she will also be paying a 5% resort tax to the State of Florida for rentals under 180 days in length. My local county/state combined sales tax is 7% and with a resort tax added it becomes 12%. I have a neighbor who is in violation of our community covenant by using her single family home as an AIRBNB rental. She is being investigated by the state and county for not collecting tax.
33
@Alan .....and don't forget to add the cost of a car rental.
I can't image seeking out the scorching heat in the summer and going to Palm Beach. I would much prefer the temperatures of the Jersey Shore in the summertime. To each their own.
3
Collier County, Florida, home of Naples and Marco Island, has joined the money grab by increasing its tax on short term rentals by 50% (from 4% to 6%) in the past year, with little warning to home owners. Since many rental contracts had already been signed, this left the owners having to absorb the difference.
Added to the state’s existing 6%, short term rental taxes are at 12%
1
If renters really want their income, they can eat the tax or part of it, or get nothing. They can reduce their rate for a year or so and fight the legislature in the meantime.
30
@John You're the kind of guy politicians love.
1
Living in MA, I fully support our tax on short term rental properties. These properties are businesses and should be taxed at the same level as similar businesses (ie, hotels and motels). People who stay at these properties drive on our roads, which must be maintained, & flush their toilets into our sewage system, which full time residents pay taxes to maintain. No free rides, please.
207
Agreed. Not that I want the person who bought a house on my quiet dead end street post-Sandy, misrepresented his purpose there to his new neighbors (not that a new homeowner has to explain his purpose to others, but it’s a little galling when the ‘house for my disabled adult son’ turns out to be a year-round Airbnb rental), violated Town building code in renovating it, and now rents it out every weekend to a different set of strangers, to be running business down the block from me; I don’t.
But it costs money every time we have to summon the police or Code Enforcement over the actions of vacationers who think nothing of breaking the rules and disrupting our homes and lives with conduct they undoubtedly would not engage in at their own homes (nor want a stranger next door to their homes engaging in, either). Someone should pay, and it shouldn’t be the people who live in and already pay enough tax to support their community.
43
@cirincis
We need to break vacation rentals into the two types of properties that there are: the whole-home rentals and the are the "owner lives in the back" rentals. Two very different impacts on the community.
5
@R.F. You do realize that the home owners are already paying their taxes on the property, right? You may be on to something with the roads and toilet bowl flushes though. I know that when I rent a place I spend the whole time riding around on the local roads making as many potholes as possible and then just sit in the bathroom flushing the toilet. Last Summer I set a personal record of 350 flushes over the course of a week.
Please. This comment reeks of someone who hates the influx of "out of towners" every summer without giving one thought to the people who rely on that very group to make a living.
3
How can an 11% tax push vacationers to Florida? The impact of the tax is widely exaggerated. States should be allowed to regulate these new sectors of the economy that have serious impacts on the availability of housing and compete with other regulated activities.
126
SO, was the REAL reason for this is to refer rental business to real estate brokers? Why are they allowed to take their cut, when they do not even share any of the risks or inconveniences of home owning, and NOT pay any taxes?
14
@cheryl
Your post is incorrect. Rental Businesses DO pay taxes.
2
@Paul P. No the article clearly states "The only exceptions are rentals arranged through a realtor, which are not subject to the tax." The real estate agents pressed for this tax to drive business from AirBNB to their agencies. If the tax applied to all rentals of less than 14 days, that would be a different story.
12
I can see the argument for imposing a tax, but I struggle to understand why NJ also does not tax short-term rentals that are booked through real estate agents. As NJ shore property owner, I switched to using a real estate agent instead of an online service. As a result, renters are not subject to tax, but I now pay a fee to a real estate agent. Why are bookings through real agents not subject to tax? Don’t these renters need to pay their fare share? I sense Mr Murphy wanted to help out his friends in the NJ real estate industry.
21
Laws of offer and demand anybody ? If renters don't want to pay more, and landlords need to rent out, then rents have to come down. And if this means less fancy maintenance, then contractors will have less work. Listing agents could bring down their fees.
Nothing wrong with all this. But of course it is also worth trying lobbying for a repel of the tax or enticing renters to pay up.
4
New Jersey's tax on short term rentals is not an AirBnB tax; it is not in response to unregulated short term rentals of properties meant to be long term rentals.
It is just a very high new sales tax, on an industry that has been around for more than my lifetime. Weekly rentals are the norm, and have been, at the shore, for at least my lifetime, probably longer. We rented a duplex for week at the shore in 1968 or 1969 - so 50 years minimum.
New Jersey just figured they could hide this under the guise of regulating the new sharing economy. Given the cost of constantly rebuilding the shoreline and infrastructure after storms, the tax may be justified and sensible. But it isn't an AirBnB tax. That is a misnomer.
16
The tax specifically isn’t imposed on rentals made through realtors, (which is the way the vast majority of rentals were arranged 50 years ago) so it is in fact an AirBnB tax.
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Even though I am a native New Jerseyan and a lover of the Jersey Shore, I still find it hard to have sympathy for someone who can afford to rent a house for $10,000 a week. Or a shore that is massively privately owned and/or charges "beach fees" just to set foot on what is protected by public tax dollars.
Oh, by the way... the hotel tax on a Hilton property in Eatontown, which is advertised as "Jersey Shore" but isn't? 14.63%. If it weren't for the Realtor Loophole, I'd call this "parity."
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So, let me understand this example: one woman and her children are forced to pay still more for air fare and lodging to go to West Palm Beach-a-go-go because she can't afford the 11% AirBNB tax on a home in NJ that goes for, say, $3-5k a week? SO AMERICAN! We want it all without having to pay for it! And if someone dares to say TAX, then we throw a fit. It seems only right that, if you want to operate your home like a hotel, it should have to be zoned, taxed and regulated like a hotel. Are all hotels going bankrupt and dying because they're taxed?
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@David BD
Agreed, the "economical"move she made simply doesn't compute. Ms Hiller might have been asked to explain her real reasons.
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@David BD You’re missing the point, for the same money we can go elsewhere. And that’s my choice. The point is we need to stop being Government ATMs. I’m so over fairness, pay my fair share. I do that every day. So don’t lecture me about not being American. Again, it is the same money.
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@cheryl uhhh, it’s the same money. No motive. Love the comments, y’all really don’t get it.
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Ms Vitale, who has been charging renters $2400 for years could simply reduce her rent to $2150.54 per week and her renters would pay $2400/wk including tax. Her income would of course be reduced, but then her annual income tax payments to the US Government (and the NJ government, assuming NJ has an income tax) would be reduced as well.
Admittedly, there will be some additional bookkeeping to square things with the state, but then that's part of being an entrepreneur, isn't it?
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on LBI some of the homes are 750K to purchase.
The rest are in the million dollar range.
beach block rents for 10K a week.
so who exactly is whining over this extra $280?
someone mentioned jealousy
trust me no one that is poor vacations on LBI
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Admittedly, there is lots of wealth on LBI ( I grew up in Harvey Cedars). But not everyone rents in Loveladies. There are lots of rentals in Ship Bottom or Beach Haven where middle income families come to vacation, and home prices are significantly below your $750K threshold.
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Surely realtors are behind this tax? I own a beach house I rent in NJ. I list it with a realtor who gets a 12% fee for doing nothing other than listing it on the internet. He holds the deposit check for a couple of weeks, charges the tenants another $45 extra for damage insurance. I have to submit a claim within 7 days to get any reimbursement which I can’t do because I can’t get there between rentals. When I have my claims have been refused. The fee is never refunded to the renter as was the case if a cash deposit! To top it off realtors run the zoning commission and so what was a 7 mile island of family homes is quickly becoming condo and apt heaven all in the name of cash.
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@anselm - It truly is such a burden owning a 2nd (3rd? 4th?) home beach house, isn't it, my man? Then being forced to list it with a do-nothing realtor rather than grabbing one's own bootstraps and listing it oneself. Then having to find cheap undocumented labor for upkeep and cleaning. It so cuts into one's polo time. Sigh!
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@anselm. You could sell and put the money into a very low fee index fund. No fuss, no muss. I suggest Vanguard.
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If it's not this tax at the Jersey, it's something else. With the home and business owners it's always chicken little. Home/business owners "down the shore" just love to bellyache, moan and groan always about how bad business is. Then in the fall, we'll all hear about how it was another banner year for them.
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A non-issue. The wealth concentrated in the New Jersey/NYC area is staggering. Anyone capable of paying $2500 for a weekly beach rental can afford the extra $280 in tax. That's one less Lobster dinner for the family. Time you pay your fair share for the footprint you and your family bring to the area.
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@Tim - let me see if I'm understanding you. What 'footprint' are you referring to? Someone living in a house for a week where someone would have been living anyway AND spending money in the local economy is somehow an imposition on the services of your fair township?
You're gonna' have to help me with that one.
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I understand that many Airbnb are professional hosts but presumably they also have to pay income tax.
The incessant taxes on everything and anything are oppressive. What justifies this tax other than greed? Hotel industry lobbying? Maybe the hotels should charge fewer fees or reduce their rates. Isn’t one of the ideas of capitalism that competition sets pricing? It seems like sour grapes by the hotel industry with a willing legislature as accomplice. Or just opportunism and greed by the legislature.
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@Imkay - "The incessant taxes on everything and anything are oppressive. "
Poppycock! Taxes in the US are lower than they've been in many decades.
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This is another hit on the small real estate investors/homeowners in high tax states. Why invest?
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Oh please! Anyone who can afford $3, $4, or $5 K for a week at the shore is not going to change their favorite vacation spot because of an 11% tax. And anyone who owns a rental property or two, or three, at the shore can afford to make a little less. I do find it interesting, however, that the NJ Association of Realtors managed to protect their turf.
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@Cindy Sue "Anyone who can afford $3, $4, or $5 K for a week at the shore is not going to change their favorite vacation spot because of an 11% tax."
Is the notion of a budget really that foreign?
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@Cindy Sue I did change my favorite vacation spot this year, because when it’s all added up, it’s the same money. I do have a budget and yes the few extra hundred dollars is spending money. There are plenty of deals out there and I got one. I’m not an ATM and the flow of money is not endless here. Rentals are expensive enough and during July and August.
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@Cindy Sue Oh yes we will!!! Just to protest the abuse of the NJ Association of Realtors and the greed. My extended family has rented on LBI for over 60 years. Until 15 years ago the realtors ripped off both the owner and renter will with a 30% commission. Never in the 40 year I have personally rented has a realtor helped with a problem with the rental. We have continued to rent the same house from the owner for the last 15 years and they have immediately responded to everything from bad refrigerators to broken screened doors. As a resident of a town full of B & Bs I do understand some taxing but 11% is ridiculously high. Personally we have decided to give up our week on LBI in protest of the tax. The Atlantic Ocean and beaches of New Jersey are the most beautiful place in the world. My life is less without some soul restoring time there.
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If I own a piece of property why should I not be allowed to rent it out as a residence as I see fit? Jealousy?
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You are allowed to--it's just that their is a tax on your income. As there is on all income (or at least if you are doing it legally, there is a tax).
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@Leslie T.
First, the rent collected is not "income", it is gross revenue. Income is what is left over after paying for mortgage, maintenance, and, yes, other taxes.
Second, owners already pay personal income tax, including what they might net from their rentals, right?
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I am using the term "income" as it is used by the IRS in its bulletin "knowing the facts about renting out residential property."
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When I vacation in New England and stay at motels, I pay a similar tax on the room rentals. What's the big deal with a 11.6 % tax on online home rentals? $280 on a $2,400 rental is small change.
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