N.J. renters relax after Murphy signs bill amending the ‘Airbnb tax’

Aug 13, 2019

Owners who rent their Garden State homes are breathing easier after Gov. Phil Murphy signed legislation that exempts them from having to charge renters costly new taxes.

The so-called “Airbnb tax” levied New Jersey’s sales tax and hotel and motel tax on short-term rentals, totaling nearly 12% per transaction.

Gov. Phil Murphy signs legislation to limit new taxes applied to short-term rentals. (Edwin J. Torres/Governor's Office)

Homeowners and vacationers said the move would hurt tourism at the Jersey Shore and cause people to spend less in one of the state’s critical economies.

On Friday, Murphy signed the legislation, which now exempts owners who rent directly to their clients. People who rent through online marketplaces such as Airbnb and VRBO will still have to pay the two taxes.

“It will make my life a lot easier, not having to file and deal with taxes or explain to people their vacation’s going to cost more,” said Tim Krug, who rents out a duplex in Beach Haven.

Krug said the policy was ill-informed to begin with, suggesting that even though some renters would have paid the new taxes, they might have spent less once at the Shore. “Now, they have $300 or $400 less in their pocket this summer,” he said. “That’s fewer trips out for ice cream. Maybe they cut mini-golf, or they don’t go out to eat a couple nights.”

In a statement, Murphy said the Jersey Shore economy was critical to the state’s well-being. “Access to affordable rental properties for visitors and income on rentals for homeowners are the backbone of that economy,” he said.

Murphy had been facing pressure to sign the legislation from homeowners who feared that renters would simply choose different vacation destinations once they saw the price of renting in New Jersey.

“This tax [acted] like an incentive to go elsewhere,” said Tim Feeney, who rents out a home in Holgate. “There are less expensive places to vacation. People can go to Delaware, they can go to Maryland, they can go to North Carolina.”

Now, the owners said, things will return to normal.