New Jersey considers bill to cancel tax on Jersey Shore rentals

Posted: Updated:

It could soon cost slightly less money to rent a beach house along the Jersey Shore.

Lawmakers have approved a bill that would cancel a tax imposed on people who rent out their homes by the beach. The bill is currently on Gov. Phil Murphy’s desk to be signed.

The 11.6% tax was imposed this summer on shore rentals. But the original law was never intended to target them. The law was supposed to impose the tax on homes or rooms rented out via online sites like Airbnb or VRBO – where often only one room is rented out.

The idea was to treat these rentals like hotels or motels and levy the 11% tax. But the law affected some property owners like Duane Watlington, who rent directly to tenants or use a real estate broker.

“I’ve lost rentals. I’ve lost three weeks already this year that I’m not going to get back,” Watlington says.

Watlington says that not as many summer homes are being rented out because the costs are increasing to offset the tax.

“An average vacation rental at say $3,000 or $4,000 a week, you’re adding anywhere from $360 to $400 additional for the tax,” Watlington says. “That’s less money those families have to go out to dinner, to spend a couple more nights on the boardwalk, to buy souvenirs.”

Officials say that the law was never intended to hurt homeowners. Companies like Airbnb were on board with the tax – which came out to a 6.6% sales tax and a 5% hotel occupancy fee.

If the governor signs the law, it would go into effect immediately.

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