NEW TAXES ON VACATION HOME RENTALS IN NEW JERSEY
Did you find your last vacation house rental by going online to websites such as Airbnb, VRBO, HomeAway, or a similar site while planning your last trip to the Jersey Shore? Vacation property ownership is one of the fastest growing small businesses due to the growth of online sites like Airbnb. In fact, a booming demographic of Airbnb hosts is seniors. In New Jersey, a survey found that 6,000 property owners earned over $50 million dollars by renting their home in 2016 on Airbnb.
Many people are choosing these easy and accessible websites to find the perfect home for their stay. People are drawn to these online vacation rental websites because they can get more space for a lower price. However, for New Jersey vacationers, this process might not be as appealing next summer.
It appears that the State of New Jersey wants a larger piece of the booming online vacation rental industry. With the new tax regulation going into effect October 1st 2018, these online vendors in New Jersey are subject to taxes in a similar way that hotels are treated. This may cause a problem for you whether you are a vacation property owner or if you are a renter.
If you previously owned a rental property, you paid taxes on the income you earned from the rental. But now, the State of New Jersey wants to collect sales and occupancy taxes on the gross amount of rent collected. These taxes are to be paid by the renter, not the property owner, which could negatively impact the property owner by making the rental less affordable to potential vacation renters.
During this podcast, I’ll be joined by Cordasco Financial Network in-house CPAs Jim Tate and Tim Joseph who help oversee our client’s tax strategies. We will take a look at these new sales and occupancy taxes that begin this October, and will directly impact vacation property owners and renters who use websites such as Airbnb to connect for short-term seasonal rentals. The new taxes total more than 11%. If you have a real-estate portfolio or if you are a renter, this podcast is important for you. You’ll learn about an exception to this new tax rule.