As of October 1, 2018, a new law imposes Sales Tax, State Occupancy Fee, and the Meadowlands Regional Hotel Use Assessment on charges associated with the rental of transient accommodations in New Jersey.

What is Transient Accommodation?

"Transient accommodation" means 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. This definition includes rentals made through "transient space marketplaces” as well as rentals that are made directly by the homeowner through classified listing sites, local newspaper ads, referrals from friends/family, or placing a sign on the home.

The following are NOT considered transient accommodations:

  • Hotel or hotel room
  • Room, group of rooms, or other living or sleeping space used as a place of assembly
  • Dormitory or other similar residential facility of an elementary or secondary school or a college or university
  • Hospital, nursing home, or other similar residential facility of a provider of services for the care, support, and treatment of individuals that is licensed by the State
  • Campsite, cabin, lean-to, or other similar residential facility of a campground or an adult or youth camp or
  • Furnished or unfurnished private residential property, including but not limited to condominiums, bungalows, single-family homes, and similar living units, where:
  • No maid service, room service, linen-changing service, or other common hotel services are made available by the lessor, and
  • The rental transaction is executed by a real estate broker licensed by the New Jersey Real Estate Commission and
  • The keys to the property, whether a physical key, access to a keyless locking mechanism, or other means of physical entrance to the property, are provided to the lessee at the offsite location of the licensed real estate broker.

What is Transient Space Marketplace?

A "transient space marketplace" is an online marketplace through which a person may advertise and offer transient accommodations or hotel rooms to individuals in exchange for consideration.

Who Must Register with the State for the Collection and Remittance of all Applicable Taxes and Fees?

Every person who charges for the rental of a transient accommodation must register with the State for the collection and remittance of all applicable taxes, fees, or assessments by filing a business registration application (Form NJ-REG).

Registration is required unless:

  • All rentals are solely consummated through a transient space marketplace, and rent is collected by the transient space market place; or
  • All rentals are executed by a real estate broker licensed by the New Jersey Real Estate Commission, the keys or other means of physical entrance to the property are provided to the lessee at the location of the offsite real estate broker, the rental property is private residential property, and the lessor does not provide common hotel services such as maid service, room service, or linen-changing service

To register with New Jersey, visit the Division of Revenue and Enterprise Services (DORES) website. Once registered, you will receive a letter containing additional filing and payment information.

Who is Responsible to Collect Taxes and Fees if Rentals are Made Through Transient Space Marketplace?

A transient space marketplace is required to collect and remit Sales Tax, and any applicable State and local occupancy tax, assessment, or fee listed above on behalf of lessor of transient accommodations located in New Jersey, ifthe payment for the transient accommodation is made, directly or indirectly, through the transient space marketplace. Therefore, when marketplaces do not collect the payment from the customer, marketplaces are not required to collect tax on transactions that occur through the transient space marketplace.

How are the Sales Tax and State Occupancy Fees Billed?

Sales Tax, the State Occupancy Fee, the Meadowlands Regional Hotel Use Assessment (if applicable), and any other applicable tax, fee, or assessment, other than the Atlantic City Promotion Fee, must be separately stated on any bill provided to the customer and are collected by the lessor on behalf of the State. The lessor is personally liable if the taxes, fees, or assessments, are not remitted to the Division.

Sales Tax

The law imposes Sales Tax on charges for the rental of transient accommodations at the rate of 6.625 percent.

What Charges are NOT Subject to Sales Tax?

Charges for the rental of transient accommodations are not subject to Sales Tax if:

  • The sale is executed by a real estate broker licensed by the New Jersey Real Estate Commission, the keys or other means of physical entrance to the property are provided to the lessee at the location of the offsite real estate broker, the rental property is private residential property, and the lessor does not provide common hotel services such as maid service, room service, or linen-changing service
  • The occupancy occurs for at least 90 consecutive days (permanent resident exemption)
  • The occupant is an entity that has been granted exempt status by the Division and has been issued an Exempt Organization Certificate (Form ST-5) or
  • The occupant is the federal government or the State of New Jersey or any of their agencies or instrumentalities 

State Occupancy Fee

The law imposes the State Occupancy Fee at the rate of five percent on charges for the rental of transient accommodations that are subject to Sales Tax. However, in municipalities where the rental of transient accommodations is already subject to a local tax on occupancies, the State Occupancy Fee is imposed at a lower rate (Atlantic City: one percent; Newark and Jersey City: one percent; and the Wildwoods: 3.15 percent).

Municipal Occupancy Tax

The law authorizes any New Jersey municipality, other than Newark, Jersey City, Atlantic City, Wildwood, Wildwood Crest, and North Wildwood, to amend or adopt an ordinance that imposes the Municipal Occupancy Tax on charges for the rental of transient accommodations in that municipality, which can be up to three percent. The Municipal Occupancy Tax will be effective on the first day of the first full month following 90 days after receipt of the ordinance by the State Treasurer.

The majority of the municipalities that have adopted a Municipal Occupancy Tax have authorized the tax at a rate of three percent.

If you have responsibility over a transient accommodation as defined here, and are liable for taxes under the new law just passed in October, you should discuss the process with your trusted CPA or other financial adviser to be sure that you are in compliance regardingpaying Sales Tax, the State Occupancy Fee and the Meadowlands Regional Hotel Use Assessment.