Newark, New Jersey, starts enforcing short-term rental permit requirement

Short-term rental (STR) owners in Newark, New Jersey, are required to register with the city annually under new rules passed last year — and the city intends to enforce the law, Mayor Ras J. Baraka has announced.

Newark passed its STR law in 2019 and amended it in December 2023. Under the measure, an STR is defined as a dwelling unit that offers stays of up to 28 continuous days to transient occupants. Property owners are required to register with the city’s Department of Engineering to receive an STR property permit, which costs $250. Hosts can apply via Newark’s website, where they can also renew permits and update account information.

The ordinance requires STR hosts to own the property they offer for short-term stays. STRs must also be the host’s principal residence. To qualify as a principal residence, the city requires that the property is:

• Where at least one of the property owners spends the majority of their nonworking time
• Most clearly the center of their domestic life
• Identified on their driver’s license or State Identification Card as being their legal address

STRs are prohibited in homeowners associations that don’t allow them, and in two-family properties where the other unit is not occupied by the owner. Properties offering stays where the owner is present during the stay may offer only up to two rooms for rent. STRs must also follow all city laws, including noise and nuisance regulations.

The city can impose fines of up to $2,000 per violation for those who don’t follow the law. Newark is using a software platform to help identify operating STRs and increase compliance.

“I’m happy that so many property owners in Newark choose to earn extra income while offering short-term rental hospitality to visitors experiencing our city’s attractions. Too many of them, however, neglect registration, which can result in their being cited for a violation,” Baraka said. “I encourage everyone offering short-term rentals to be as responsible to their city as they are to their out-of-town guests.”

STR operators in Newark also need to follow local and state lodging tax regulations. New Jersey imposes sales tax on all STR stays, plus a 1% hotel occupancy fee on Newark STR stays.

Short-term rental operators must register with the state for tax purposes at least 15 business days prior to commencing business — unless all of their sales transactions go through a real estate broker or an online STR marketplace such as Airbnb or Vrbo. In that case, the marketplace is responsible for collecting taxes and the operator doesn’t need to register. However, hosts who deal directly with the guest in collecting payment must register with the state.

In addition to state sales tax and the occupancy fee, Newark hosts must also collect a local occupancy tax that’s remitted to the city. Airbnb and Vrbo don’t collect this tax on behalf of Newark hosts, who are responsible for local tax compliance.

Avalara MyLodgeTax can help short-term rental hosts automate lodging tax to streamline and simplify lodging tax compliance. For more on lodging taxes in New Jersey, 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.