New Jersey Limits Scope of Transient Accommodations Subject to Taxes and Fees

New Jersey enacted legislation that amends the state’s transient accommodations law of 2018 and narrows the scope of rentals that are subject to tax and fees. On and after August 9, 2019, rentals of transient accommodations are no longer subject to New Jersey sales tax, the State Occupancy Fee, and other applicable taxes and fees, unless the rental is obtained through a “transient space marketplace” or is considered a “professionally managed unit.”

A “transient space marketplace” is a marketplace or travel agency through which a person may offer transient accommodations to customers and through which customers may arrange for occupancies of transient accommodations. “Transient space marketplace” does not include a marketplace or travel agency that exclusively offers transient accommodations in the State owned by the owner of the marketplace or travel agency.” The Transient space marketplace is responsible for the collection of all applicable taxes.

A rental “obtained through a transient space marketplace” means payment for the accommodation is made through the marketplace, either directly or indirectly, regardless of which person or entity receives the payment. Contracting is done through the marketplace or travel agency.

The legislation defines “professionally managed unit” as a room, group of rooms, or other living or sleeping space for lodging occupants in the state. It is offered for rent as a unit that does not share any living or sleeping space with another rental unit and is directly or indirectly owned or controlled by a person who offers two or more other units for rent during the calendar year.

Under the amended legislation, rentals that a homeowner facilitates directly, such as through local newspaper ads, personal referrals, or signage, will not be subject to the tax if the homeowner is collecting the rental payment themselves. (Ch. 235 (A.B. 4814), Laws 2019, effective August 9, 2019)

Posted on September 30, 2019