New 3% tax on Airbnb rentals in Ocean City to take effect soon.

Vacationers planning to visit Ocean City, New Jersey, will soon encounter increased costs associated with short-term rental accommodations booked through platforms like Airbnb and Vrbo. In a recent decision made by the city council, members voted 4-3 to enact a 3% tax on rentals arranged via these third-party services, a move aimed at addressing the influx of visitors that has necessitated additional municipal services.

The council members supporting the measure argued that the tax is a necessary response to the growing demand for short-term rentals, which typically cater to guests looking for stays of a few nights. They contend that this increased tourist activity requires the city to provide enhanced services, and the new tax will contribute to offsetting the related costs.

It’s important to note that this 3% tax will not be applicable to rentals booked directly with property owners or through traditional real estate offices, which have historically been the primary avenues for securing vacation homes in the area. The tax is expected to take effect within three months, contingent on state approval.

Opposition to the tax has emerged, especially from rental hosts like Sean Barnes, who argued that short-term rental guests do not impose greater costs on the city compared to other visitors. He expressed concern that the tax unfairly targets specific rental platforms. Similarly, Brian Salvo, a rental property owner, voiced his dissatisfaction, highlighting that the fees already associated with platforms like Vrbo and Airbnb create challenges for property owners and dissuade potential renters.

Salvo noted that he relies heavily on these platforms for exposure, emphasizing that a significant portion of his clientele comes from them. He has already experienced the negative impact of additional fees, which he believes could deter potential renters from choosing his properties.

Despite the concerns, supporters of the tax, such as council member Dave Winslow, asserted that comparable fees exist in other Shore towns and that Ocean City’s tax rate is reasonable. Winslow illustrated this point by mentioning that a renter facing a fee on a ,500 rental is unlikely to abandon their plans over such a sum.

Legal representatives for Airbnb raised concerns in advance of the council’s vote, asserting that the tax should also be applied to hotels and motels to align with state law. They warned that the ordinance risks violating the principles of equal treatment under state regulations and could lead to costly legal challenges for the city.

Another council member, Jody Levchuk, who also operates short-term rentals, argued that hotels incur different operational costs, such as private waste removal and staffing for on-site issues, justifying the tax’s application only to short-term rental platforms.

Public policy representatives from Airbnb have pointed out the importance of short-term rentals to New Jersey’s economy, especially in regions with scarce affordable hotel options. They warn that the proposed tax could adversely affect families looking for budget-friendly accommodations and threaten the local economy that relies on the spending of short-term rental guests.

As the situation unfolds, stakeholders in Ocean City’s tourism and hospitality sectors will closely monitor the implications of this new tax and its potential impact on the area’s dynamic rental market.

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