Jersey City voters support tighter short-term rental rules; Telluride voters approve new vacation rental tax

Voters in Jersey City, New Jersey, opted to support tighter rules on short-term rentals on Election Day, defeating a referendum that would have overturned the city’s vacation rental law.

After the law was passed this summer, more than 20,000 signatures were submitted to the city to get the issue on the ballot. Airbnb spent more than $4 million supporting the measure, while opponents spent around $1 million.

The City Council passed the new law amid concerns that short-term rentals were adversely affecting the supply and affordability of permanent housing as well as the character of neighborhoods. The ordinance updated a 2015 law that legalized vacation rentals. Short-term rental listings have increased tenfold since then.

The law bans vacation rentals in buildings with more than four units and limits short-term rentals to 60 days per year when the owner is not on-site. Short-term rentals are only allowed in condominiums with approval of the condo board, and renters are not allowed to operate short-term rentals at all.

The rules also require hosts to obtain a permit from the city, which must be renewed every year, and an agent must be available 24 hours a day, seven days a week, to respond to issues within two hours.

The new law goes into effect on January 1, with existing short-term rental contracts honored until January 1, 2021.

New Jersey short-term rental operators are also required by state law to collect lodging taxes from guests — with the exception of short-term rentals facilitated by real estate agents and those that rent directly to guests rather than by going through intermediaries such as Airbnb or Vrbo.

Hosts are required to collect state sales tax, hotel occupancy fees, and Meadowlands Regional Hotel Use Assessment fees — where applicable — on rentals of less than 90 consecutive days. The law also allows some municipalities the option to impose new taxes and fees on short-term rentals.

HomeAway/Vrbo collects state sales taxes, state occupancy fees, and Meadowlands Regional Hotel Use Assessment fees from guests on behalf of its hosts, but not local Jersey City taxes. Airbnb also collects all the required lodging taxes for Jersey City.

Short-term rental operators must register with the state for tax purposes before they can start collecting lodging taxes from guests — unless all of their sales transactions go through an online rental platform. In that case, the platform is responsible for collecting taxes and the operator doesn’t need to register.

For hosts required to collect lodging taxes themselves, MyLodgeTax can automate and simplify lodging tax compliance. For more on short-term lodging taxes in New Jersey, see our state Vacation Rental Tax Guide. 

Meanwhile, in Telluride, Colorado, voters approved a new 2.5% lodging tax on vacation rentals that will help fund affordable housing. The total lodging tax on short-term rentals will rise to 15.15% beginning January 1, 2020.

Short-term rental hosts in Telluride are required to collect town lodging taxes from guests and remit them to the city, along with state and county taxes. Before hosts can collect any lodging taxes, they must register with both the town and the state.

While both Airbnb and HomeAway/Vrbo collect state and county taxes for their hosts, neither of the platforms collect local Telluride taxes, so hosts are responsible for collecting and remitting lodging taxes to the town themselves.

MyLodgeTax can automate and simplify short-term rental tax compliance for hosts, including lodging tax registration and filing. For more on short-term rental taxes in Colorado, see our state Vacation Rental Tax Guide.

If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.