Duane Watlington has been renting out his beach house on LBI for five years. But this year, he has to deliver some bad news to his regular renters that their rent is going up by 12 percent. It’s the result of a new law that taxes short-term rentals.
“What I’m charging covers my expenses on the property. So the tax, it’s not a tax on us, the owners. It’s a sales tax and occupancy tax on the vacationers. So I’m passing it on to them, which is what the tax was intended to do,” said Watlington, vice president of the New Jersey Shore Rentals Coalition.
A Treasury Department spokesperson said the tax was “ … intended to tax online rental services such as AirBnB to create a level playing field with existing hotels and motels that are subject to tax.”
But individual homeowners who rent directly to vacationers got lumped in with AirBnB and similar sites, and Watlington says renters are taking their vacation dollars elsewhere — like out of state. That’s why he and a group of similar homeowners created the New Jersey Shore Rentals Coalition.
“The Coalition’s goal is to exempt the homeowners along the Jersey Shore from paying the tax they rent direct. That are direct transactions between the homeowner and the guests that rent their house,” Watlington said.
Who’s not included in this tax is just as important as who is: realtors. The law exempts any homeowner who uses a realtor to rent their home.
“What I think that has really done is kind of redistributed the inventory maybe away from a lot of the larger for rent by owner sites, and those landlords have come back over to us,” said realtor Matt Schlosser.
“Really all you’re doing is converting a tax to a commission,” Watlington said.
Meaning you’re going to pay more either way. Chuck Venedam is a homeowner in Point Pleasant Beach and he says the tax will have a ripple effect.
“A lot of these people are not going to be coming down. It affects the renters, and it also affects the local businesses because the businesses depend on these renters coming down for the income and to make money also,” said Venedam.
Assemblyman John McKeon has sponsored a bill that would exempt any homeowner who rents directly to vacationers.
“I do think that there was an unintentional consequence. The way the legislation was drafted, and as a lot of things happened in July when you’re in crunchtime, the wordsmithing of it was to make certain that it didn’t just look as, you couldn’t just say Airbnb,” McKeon said. “And again, we keep talking about the beautiful Jersey Shore. Again I think a Lake Hopatcong, Greenwood Lake and various other state forests that in the same way people rent homes there as well. And this should apply across the entire state.”
Both the Senate and Assembly versions of the bill have been introduced in committee, but there’s no telling whether they’ll move to the floor for a full vote or how long that process could take.