PHILADELPHIA (CBS) – A new little-known tax in New Jersey is causing some concern down the shore. It has some renters considering other plans this summer.
It’s not lost on Vicki Allison how fortunate she’s been to have a Cape May beach house passed down generation to generation in her family.
“This house was bought by my grandfather in 1936 during the depression. I spent all my childhood summers down here, my children spent all their childhood summers down here,” said Allison.
Between taxes, insurance and maintenance costs, she depends on renting out the house most of the year to keep it. With a prime location and plenty of room for big families, staying booked hasn’t been hard– until now.
“I have openings this year for the first time in 10 years. I have a lot of repeat renters in the summer but a couple of them just decided they can’t afford it,” said Allison.
Allison says the problem is New Jersey’s new vacation rental tax.
In December, the Division of Taxation issued guidelines on a little-known tax passed last year on what’s called “transient accommodations.” What is says is unless you use a realtor to rent out your vacation home – you must charge sales and occupancy taxes which range from about 12 to 14 percent depending on the town. So if your weekly shore rental cost $3,000 last year, tack on another $400. That has some shore renters re-considering plans or at least planning a vacation with less to spend.
“That’s their boardwalk rides so it is trickling down to other people and then that’s going to affect me who uses it for my livelihood to live here for 35 years,” said Ocean City rental owner, Nancy Notaro.
Some New Jersey lawmakers who voted last year in favor of the short-term rental tax say they didn’t intend for it to impact private citizens who directly rent their homes. It was to tax peer-to-peer rental services like Airbnb and VRBO. Now, some of those same lawmakers are trying to correct the issue.
“You don’t want to leave a law on the books that to me is confusing and I want to do what we can to rectify it,” said New Jersey Assemblyman John McKeon.
Bills to exempt rental owners from taxes on direct transactions have been introduced in Trenton but face several hurdles to clear and no time table to become law. Meanwhile, many shore renters and businesses are hoping for some kind of relief before the summer season.