NJ Airbnb users now must pay tax, unless they use a real estate agent

Visitors to the Shore who want to avoid paying a new occupancy tax have a loophole: Find a place to stay through a real estate agent.

Otherwise, guests who book rooms directly from owners through online sites such as Airbnb and VRBO are scheduled to begin paying a 5 percent tax on Oct. 1.

“Since 50 percent of bookings are direct by owner, it’s going to affect a large part of the Jersey Shore,” said Duane Watlington, owner of VRLBI.com, which has more than 800 listings on Long Beach Island.

The law signed by Gov. Phil Murphy will force owners who put their homes, or rooms, up for the short term to collect the state’s 6.625 sales tax and 5 percent occupancy tax. Municipalities also can collect taxes of up to 3 percent.

It’s a bid by government agencies to adjust to the digital age that is disrupting long-standing businesses.

Watch a video at the top of this story on how to save money on Airbnb.

New Jersey hotel and motel operators, who already collect occupancy and sales taxes, have said it is only fair that homeowners taking advantage of the technology to raise extra money do the same.

“They’re acting like hotels, they should be paying the same tax,” said Marilou Halvorsen, president of the New Jersey Restaurant and Hospitality Association, a trade group that represents hotel and motel owners.

New Jersey is one of 44 states, along with the District of Columbia, where Airbnb collects occupancy taxes on behalf of their hosts.

The law in New Jersey comes with complications. Owners of vacation homes at the Shore, for example, often use real estate agents instead of Airbnb to rent their property during the summer.

It prompted lawmakers to exempt visitors from the tax if they pick up keys to their vacation spot at the real estate agent’s office.

“We are not a transient occupancy website,” said Jarrod Grasso, chief executive officer of New Jersey Realtors, a trade group. “We are proving a service to the homeowners. They saw fit to exempt us.”

The New Jersey Division of Taxation was still finalizing the rules late Friday to ensure the tax would be applied specifically to online sites like Airbnb.

Still, the department said homeowners who rent their property directly to consumers by word of mouth still would have to collect the tax because federal rules prevent state and local governments from discriminating against electronic commerce.

Watlington said his own online rental business won’t be affected; it only lists properties, connecting visitors with Realtors.

But he also rents three homes that he owns on Long Beach Island, and he noted that a family that spends $5,000 for a week-long vacation at the Shore would have to pay almost $600 more.

“The Realtors now have a competitive advantage because you don’t have to pay the tax,” he said.

Source: App.com