NJ Tax Law for Rent of Transient Accommodations

If you rent property for less than 90 days, the new law could affect you!

As of October 1, 2018, a new law imposes Sales Tax and the State Occupancy Fee on charges associated with the rental of “transient accommodations”. The law also authorizes certain municipalities to amend and impose various additional taxes, the tax and rate depends on the municipality.

Definition of “Transient Accommodations” means a room, group of rooms, or other living or sleeping space for the lodging of occupants, including but not limited to residences or buildings used as residences (90 days or less).

This definition includes rentals made through “transient space market places” (such as an Air B&B; VRBO), as well as rentals that are made directly by the homeowner through classified listing sites, local newspaper ads, referrals from friends/family, or placing a sign on the home, etc.

Who is subject to the new law:

  • If you are renting accommodations yourself, for a period of less than 90 days.
  • If you are using a Marketplace to advertise, where the advertisement contains homeowner’s contact information and the customer pays the homeowner directly.
  • You do not meet all the criteria listed below for exemptions.

The following are NOT considered transient accommodations:

  • The sale is executed by a real estate broker licensed by the New Jersey Real Estate Commission, the keys or other means of physical entrance to the property are provided to the lessee at the location of the offsite real estate broker, the rental property is private residential property, and the lessor does not provide common hotel services such as maid service, room service, or linen changing service.
  • The occupancy occurs for at least 90 consecutive days (permanent resident exemption).
  • The occupant is an entity that has been granted exempt status by the Division and has been issued an Exempt Organization Certificate (Form ST-5).

If you are using the type of transient Marketplace online service such as Air B&B or VRBO, where the Marketplace is collecting the rental fee, then they are also required to collect all applicable taxes from the customer and remit them to the Division of Taxation. In that case you are not required to register separately.

More detailed information, can be obtained from the NJ Department of Taxation website:
https://www.state.nj.us/treasury/revenue/taxreg.shtml