Tax Law A1753 - Taxes Imposed on Charges for the Rental of Transient Accommodations Clarification

It seems as though many of you are still unclear as to whether or not you have to charge the renter taxes on their rental. The answer is yes for anyone who rents their vacation home on their own or through an online website for less than a 90 day stay. I spoke to Kyle Weber, an attorney with the NJ Division of Taxation on November 15, 2018, who stated that nothing has changed regarding the Rental of Transient Accommodations Tax Law A1753

View TB-81R which details "TAXES IMPOSED ON CHARGES FOR THE RENTAL OF TRANSIENT ACCOMMODATIONS". 

While there are a couple Bills in the works to try to exempt certain areas from this tax, none of them apply at this time. If they ever do get passed, which could be years, they will provide an update on the NJ Division of Taxation website

If you have specific questions regarding the tax law, please call the NJ Division of Taxation directly at 609-292-5995. 

To be clear, if you turn your rental over to a realtor, they will need to handle the whole transaction and the OWNER will have to pay the realtor a commission. The renter will also have some fees to pay with a realtor, charges vary per agency. If you decide to go with a realtor, make sure that they are capable of securing all the peak and off-peak rentals you may need. Many owners who use realtors still advertise with us and forward their agents their leads to assure their home will be fully booked. You do not get the chance to speak to or screen your tenants. Keys or codes to your home will be distributed to potential renters, unsupervised in most cases, in the off-season when renters come down to view rentals in person. All agencies work differently, so be sure to speak to your agent about your concerns upfront.

If you rent on your own and/or advertise your rental on an online website such as ShoreSummerRentals.com, the RENTER will have to pay this new tax (NOT the owner). Read below why ShoreSummerRentals.com is still the very best option for owners who want to control their own rental business and not incur any additional expenses, commissions or fees.

Any rental business that is classified as a Short-Term Transient Accommodation must collect and file 6.625% NJ Sales Tax as well as 5% NJ Occupancy Tax for a total of 11.625% of the rental rate. ShoreSummerRentals.com listings have fields for you to enter the percentage amounts in the rate section. 

NOTE: As of the date of TB-81R publication updated on 12/7/18, none of the LOCAL municipalities have amended their ordinances to impose the Municipal Occupancy Tax on transient accommodations. This tax is currently only imposed on hotel occupancies. The local and municipal taxes DO NOT have to be collected, charged or filed at this time. The 6.625% NJ Sales Tax and 5% NJ Occupancy Tax does need to be collected from the renter and remitted to the State.

REGISTRATION  
Every person who charges for the rental of a transient accommodation is a seller and must register with the State for the collection and remittance of all applicable taxes, fees, or assessments by filing a business registration application (Form NJ-REG). Although the law requires registration at least 15 business days prior to commencing business, the registration process for persons charging for the rental of transient accommodations is unavailable until at least October 8, 2018. Please continue to check the Division’s website for updates on registering. Registration is required unless 1) all sales are solely consummated through a transient space marketplace; or 2) all sales are 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. 

To register with New Jersey, visit the  Division of Revenue and Enterprise Services (DORES) website. Once registered, you will receive a letter containing additional filing and payment information.

Registered entities already engaged in the business of renting or leasing transient accommodations need to update their tax registration to include Sales Tax, the State Occupancy Fee, the Meadowlands Regional Hotel Use Assessment (if applicable), and any other applicable taxes, fees, or assessments.

Businesses not engaged in the business of renting or leasing transient accommodations should complete a new and separate registration.

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ADVERTISING WITH SHORE SUMMER RENTALS IS STILL THE BEST SOLUTION FOR OWNERS.
(CLICK HERE TO SEE HOW SSR OWNERS SAVE THOUSANDS AND RENTERS SAVE HUNDREDS PER RENTAL)

1. No booking fees to renter. Renters are becoming aware with BOOKING DIRECT!


2. No service fees to owner.

3. No commissions to owner.

4. Low yearly fee to join.

5. Direct contact with your renters.

6. We do not handle YOUR money.

7. We do not penalize you EVER!

8. Amazing traffic to your listing.

9. Local, accessible business that is accountable for your success.

10. Owners will need to charge and collect from the renter, NJ Sales Tax of 6.625% of NJ Occupancy tax of 5% for a total of 11.625% of the rental rate. Your ShoreSummerRentals.com listing has fields for you to enter the percentage amounts in the rate section.

If you do not want to file pay and file the taxes on your own, we have partnered with a firm who will take care of submitting and filing for you for a one time $50 set up fee and then only $20 per month. Click here to get set up now! This is not a requirement to advertise on ShoreSummerRentals.com, just a recommendation.

Click here to Join or Renew with ShoreSummerRentals.com.

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ADVERTISING WITH HOMEAWAY/VRBO TYPES.
(CLICK HERE TO VIEW RENTER/OWNER COST COMPARISON)

1. Renters will pay between 6% and 12% in service fees and sometimes an administrative fee. Click here to view their RENTER service fees directly from their website.


2. Owner will pay 5% commission per rental on the pay per booking model.


3. Owner will pay and additional 3% in credit card fees. Click here to view their OWNER PPB fees directly from their website.

4. VRBO may collect and submit State Sales Tax (6.625%) as well as a State Occupancy Fee (5%) from the renters. Not sure if they will charge you for this. You should contact them to confirm they will file these taxes for you and make sure you are complaint. I hear they also tax cleaning fees, etc. which is not taxable.


5. VRBO will also charge renters a 10% service fee on top of the taxes for their cut.

6. VRBO Owner's will NOT speak directly to renters upfront, the owner has no control.

7. Owner gets penalized over every little thing, they control you!

8. VRBO will provide you a 1099-MISC form to report your income to the IRS.

9. Renters & owners will pay the most with VRBO, big corporate greed at its worst! Article on Homeaway/VRBO sneakily hiking their fees.

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LISTING WITH KELLER WILLIAMS JERSEY SHORE TO AVOID RENTER TAXES.


1. Owners should keep their SSR listing active so they can forward their leads to a realtor. Realtors may not be able to book all of your weeks. ShoreSummerRentals.com will supplement tremendous traffic to your home assuring a fully booked summer.


2. If your home is in an area that Keller Williams Jersey Shore covers, you can list your rental with with me as your listing agent. You will agree to have Keller Williams manage the bookings. The OWNER will pay Keller Williams a 10% commission if they list exclusively with Keller Williams Jersey Shore or 12% for a non-exclusive contract. 

Keller Williams Jersey Shore Rental Department covers:
a. The Wildwoods

b. Ocean City
c. Avalon

3. The renter will not pay any NJ State sales taxes or related Occupancy Taxes but Keller Williams will control the entire transaction. Since they advertise on various platforms, they are not able to screen tenants.

4. The renters will need to PHYSICALLY go to real estate office to pick up the key or codes to enter the rental home to be exempt from these taxes. Emailing of codes or leaving a key at the home will void the tax exemption.

5. The renter WILL pay an additional 4.5% of the rental rate as a transaction fee plus a $50 damage insurance fee with Keller Williams Jersey Shore. Check with your Realtor for their fees.

6. If your home is outside of the Keller Williams Jersey Shore coverage area, you can list with any Realtor in your town and forward your SSR leads to them.

7. On a $2,500.00 rental, the owner will pay $300.00 and the renter will pay $162.60 totaling $462.00 in fees between the owner and renter. For 10 rentals, the owner will pay $3,000.00.


“We Bring Owners and Renters Together”
CONTACT US TODAY!