Division of TaxationEffective August 9, 2019, the law regarding a rental of a transient accommodation was amended. As a result, beginning August 9, 2019, the rental of a transient accommodation obtained directly from the owner is no longer subject to Sales Tax, the State Occupancy Fee, and other applicable taxes and fees, unless it is a professionally managed unit, as defined below. A rental obtained through a transient space marketplace, which now includes a travel agency, or a rental of property that is considered to be a professionally managed unit, is subject to the applicable taxes and fees.
What type of rental is subject to Sales Tax, the State Occupancy Fee, and other applicable taxes and fees as a result of the amendments?
The amended law revised the definition of “transient accommodation” to limit it to the rental of a room, group of rooms, or other living or sleeping space for the lodging of occupants, including but not limited to residences or buildings used as residences, that is either:
Therefore, a rental of a transient accommodation that is obtained through a transient space marketplace or is a professionally managed unit is subject to New Jersey Sales Tax, the State Occupancy Fee, and other applicable taxes and fees.
What type of rental is not subject to Sales Tax, the State Occupancy Fee, and other applicable taxes and fees as a result of the amendments?
The following rentals are no longer subject to Sales Tax, the State Occupancy Fee, and other applicable taxes and fees as long as the owner does not offer three or more units for rent in New Jersey (a professionally managed unit):
In addition, rentals executed by a real estate broker remain not subject to the taxes and fees (see below).
Has the definition of a transient space marketplace changed?
Yes. The definition of a transient space marketplace now includes travel agencies. However, a transient space marketplace does not include a marketplace or travel agency that exclusively offers transient accommodations in New Jersey that are owned by the owner of the marketplace or travel agency (i.e., a property owner’s website).
When is a rental considered to be obtained through a transient space marketplace?
A rental is “obtained through a transient space marketplace” where the agreement for the rental is made through the marketplace or travel agency and where payment for the accommodation is made through a means provided by the marketplace or travel agency, regardless of who receives the payment. Transient space marketplaces will continue to collect Sales Tax, the State Occupancy Fee, and other applicable taxes and fees imposed on a transient accommodation when the rental is “obtained through a transient space marketplace.”
What is a professionally managed unit?
A "professionally managed unit" is a room, group of rooms, or other living or sleeping space for the lodging of occupants in New Jersey, that is offered for rent as a rental unit that does not share any living or sleeping space with any other rental unit, and that is directly or indirectly owned or controlled by a person offering three or more units for rent during the calendar year.
Is an owner who offers three or more units for rent in New Jersey required to collect Sales Tax, the State Occupancy Fee, and other applicable taxes and fees?
Yes. An owner who offers three or more units for rent in New Jersey and who directly rents (such as through classified ads in newspapers or websites, personal referrals, signage, etc.) continues to be required to collect Sales Tax, the State Occupancy Fee, and other applicable taxes and fees because the transient accommodation is a professionally managed unit.
Has the treatment of rentals transactions that are executed by a licensed New Jersey real estate broker changed?
No. Rentals transactions that are executed by a licensed New Jersey real estate broker are not subject to any of the applicable taxes and fees imposed on transient accommodations.
“Executed by a real estate broker” means that the real estate broker performs all the services necessary to carry out the rental. For example, a real estate broker advertises the rental listing, solicits renters, assists in referrals, negotiates and executes rental agreements, collects rent, etc. See N.J.S.A. 45:15-3. The rental is excluded from the definition of “transient accommodation” and is not subject to Sales Tax, the State Occupancy Fee, or any other occupancy tax, assessment, or fee when the following four criteria are satisfied:
Is a renter entitled to a refund of the Sales Tax, the State Occupancy Fee, and other applicable taxes and fees paid for a rental that occurs on and after August 9, 2019?
Yes. If the rental of a transient accommodation is obtained directly from the owner, and the transient accommodation is not a professionally managed unit, and the rental period includes days on and after August 9, the renter is entitled to a refund of the taxes and fees paid for the dates of the rental on and after August 9.
The renter should request the refund from the owner that collected the taxes. The taxes due on rentals for the month of August are not filed and paid until September, so the owner should be able to refund the appropriate tax amount directly to the renter. If the owner has already remitted the taxes to the Division, the renter may request a refund directly from the Division by filing a Claim for Refund (Form A-3730) . When submitting the refund request, the renter should include a copy of the rental agreement showing the date or dates of the rental and the taxes paid. The renter must also include proof of payment (e.g., copy of cancelled check, credit card statement, etc).
What if the rental period includes both taxable and nontaxable rental days?
If a rental starts before August 9, 2019, and ends on or after August 9, 2019, the refund will be determined by apportioning the total applicable taxes and fees between the number of days falling within the taxable period and the number of days after the taxable period.
For example, if the rental occurred from August 4, 2019, to August 11, 2019, taxes remain due for August 4 to August 8 and the renter is entitled to a refund of the taxes paid for August 9 to August 11.
Who is required to be registered to collect Sales Tax, the State Occupancy Fee, and other applicable taxes and fees?
An owner who offers three or more units for rent in New Jersey must be registered to collect the applicable taxes and fees unless all of the rentals are obtained through a, transient space marketplace or through a real estate broker. In addition, transient space marketplaces, including travel agencies, must be registered to collect the Sales Tax, the State Occupancy Fee, and other applicable taxes and fees on all transient accommodations obtained through the transient space marketplace.
Who is not required to be registered to collect Sales Tax, the State Occupancy Fee, and other applicable taxes and fees under the amended law?
Note: Although the owner may not be required to be registered, if any of their units are obtained through a transient space marketplace, those rentals remain subject to Sales Tax, the State Occupancy Fee, and other applicable taxes and fees which will be collected and remitted by the transient space marketplace.
What should an owner who previously registered do if they are no longer required to be registered?
An owner who is no longer required to be registered should file all final returns any time before the due date and then end their registration online.
Choose “File Online Now,” enter the ID# and PIN, and then "End the Business."
If you need assistance contact the Division of Revenue and Enterprise Services' Customer Service Center at 609-292-9292.
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