Joanne Slater and her husband bought a home in Ocean City a year ago for their family to enjoy but also to make it available as a vacation rental.
They made it through their first summer renting out their home, but they are looking at having to charge their guests as much as 14 percent more next summer because of a law recently passed by the state Legislature.
“They tell me they are looking for a home that their family can come back to year after year. The additional cost to those looking to rent is over $709 for prime summer weeks. That is enough to make a family think twice and look elsewhere,” Slater said.
The $709 additional dollars is based on a $6,100 per-week rental cost and taxes and fees totaling 11.625 percent.
In July, the state Legislature mandated that state sales and use taxes, hotel and occupancy fees and various municipal taxes and fees be collected from what are called “transient accommodations.”
Hotel and motels in the state already pay these fees and taxes. Supporters of the bill said online agencies such as Airbnb, homeaway.com, booking.com and VRBO (vacation rental by owner) have been operating on an uneven playing field and should pay the same taxes and fees as hotels and motels.
The definition of a transient accommodation and the exemption for Realtors is spelled out within the law.
“The following are not considered transient accommodations: furnished or unfurnished private residential properties, including but not limited to condominiums, bungalows, single-family homes, and similar living units, where no maid service ... or other common hotel services are made available by the lessor, and the rental transaction is executed by a real estate broker.”
Homeowners who rent out their own properties and do not use a real estate agent have to pay the same taxes and fees as the online travel companies.
Since homeowners usually operate individually, at least two Facebook groups are looking to rescind the tax, OCNJ Owners and Save NJ Shore Rentals From UnFair Taxation, and a website has sprung up, njshoretax.com.
“There are a lot of us that own property at the shore that we rent out,” said Paula Krasover, who is a member of the group, lives in East Vineland and rents out a condo in Cape May.
A lot of people will reserve homes for their next vacation at the end of the last vacation, which means many people already have reservations in for next summer, said Krasover, who is a member of Save NJ Shore Rentals From UnFair Taxation.
Krasover’s condo was fully booked last summer. She was hoping to do a small rent increase because her expenses have crept up, but she will not do that if renters have to pay additional taxes and fees next year.
“This is hitting the middle class. We have talked to vacationers,” Krasover said. “When you tax their vacations, there is less money to go out to dinner, to go to the arcade.”
If homeowners lose renters or can’t raise their rents because of additional taxes and fees, it may cause some owners to delay making improvements to their properties or nonessential repairs, Krasover said.
Krasover, who has owned her condo for three years, usually writes out her leases for next summer around this time, but she is holding off in the hopes the law is repealed, at least as it applies it homeowners renting out residences at the Jersey Shore.
The call of homeowners, such as Krasover, for either a Jersey Shore private homeowner exemption from the taxes and fees or a complete repeal of the legislation has not fallen on deaf ears.
Two bills were introduced Oct. 15 in the Legislature that are each at the committee level currently.
One bill looks to exempt shore counties from the state and local taxes and fees on transient accommodations.
The other, sponsored by state Sen. Jeff Van Drew and Assemblymen Bob Andrzejczak and Bruce Land, all D-Cape May, Cumberland, Atlantic, seeks the repeal of the July law, so that neither online agencies nor individual homeowners would have to pay the additional fees and taxes.
Land, Andrzejczak and Van Drew voted against the establishment of the original transient-accommodations taxes and fees bill earlier this year.
“We are taxing, tolling, feeing and charging people to death in New Jersey at every level,” Van Drew said last month before he sponsored the repeal bill.