Renting Out a Jersey Shore Second Home: NJ Taxes and Fees on Short-Term Rentals

A short-term rental of a New Jersey shore home owes 6.625% sales tax and the 5% State Occupancy Fee, plus any municipal occupancy tax, when the guest books and pays through a platform or when the owner offers three or more units for rent. A direct rental by an owner with fewer than three units, a rental executed by a licensed New Jersey real estate broker under the State's conditions, and any rental of at least 90 consecutive days fall outside those taxes, according to the NJ Division of Taxation.

I'm Dennis Mark Interdonato with The Dennis Mark Group at Keller Williams Realty Ocean Living. If you're buying a second home in Monmouth or Ocean County with rental income in the plan, the State's taxes, the town's rules and the IRS day counts belong in your numbers before you make an offer.

Which New Jersey taxes apply to a short-term rental?

The State's term for a short-term rental is a "transient accommodation." When one is taxable, the Division of Taxation's bulletin TB-81R2 and its rate pages list three charges:

• Sales tax at 6.625%.
• The State Occupancy Fee at 5%. The Division sets a lower rate only in seven cities that already charge their own local tax, and none of them is in Monmouth or Ocean County.
• A Municipal Occupancy Tax of up to 3%, if the town has adopted one by ordinance. The Division keeps a Municipal Occupancy Tax List showing which towns have and at what rate.

Each charge is listed separately on the renter's bill. The rules come from two laws: P.L. 2018, c. 49, which brought short-term rentals under these taxes as of October 1, 2018, and P.L. 2019, c. 235, which narrowed them starting August 9, 2019.

When is a rental taxable, and who collects the tax?

Since August 9, 2019, only two kinds of rentals are taxable:

1. Rentals obtained through a transient space marketplace. That's a marketplace or travel agency where the guest books and pays through the platform. The marketplace collects the taxes and sends them to the State. If a site only runs your ad and the guest contacts and pays you directly, the rental wasn't obtained through the marketplace. Your own booking website doesn't count as a marketplace either, according to the Division's FAQ.
2. Professionally managed units. If you offer three or more units for rent in New Jersey during the calendar year, your rentals are taxable even when you book them yourself through ads, referrals or signs, and you collect the taxes on those direct bookings.

So one shore house, rented directly by an owner with no other rental units, isn't taxable under these rules. Book it through a platform that takes the payment, and the platform collects the tax.

What if a real estate broker handles the rental?

A rental executed by a licensed New Jersey real estate broker is excluded when all four of the State's conditions are met:

• A broker licensed by the New Jersey Real Estate Commission performs all the services that carry out the rental, from advertising it to collecting the rent.
• The renter gets the keys, or the other way in, at the broker's offsite office.
• The property is private residential property.
• No hotel-type services, such as maid service or linen changes, are provided.

One catch the bulletin spells out: if a broker lists the rental on a marketplace and the guest books it there, the marketplace collects the taxes, because the broker didn't execute that rental.

Which rentals are exempt however they're booked?

A rental of at least 90 consecutive days. The Division calls it the permanent resident exemption, and it applies to the sales tax, the State Occupancy Fee and the Municipal Occupancy Tax.

Do you have to register with the State?

Only if you'll be the one collecting. TB-81R2 says an owner of a professionally managed unit registers with Form NJ-REG at least 15 business days before starting, unless every rental goes through a marketplace or is a qualifying broker rental. The bulletin also says the owner is personally liable if the taxes aren't remitted to the Division.

What does the IRS count when you rent a second home?

Federal tax turns on days. IRS Publication 527 (2025) has two rules worth knowing before you buy:

• Fewer than 15 rental days. "If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function isn’t considered to be rental and it shouldn’t be reported on Schedule E (Form 1040). You aren’t required to report the rental income and rental expenses from this activity."
• The personal-use test. You use a dwelling unit as a home if you use it for personal purposes more than the greater of 14 days or "10% of the total days it is rented to others at a fair rental price." Days used by you, a co-owner, certain relatives, or anyone paying less than a fair rental price count as personal days.

Rent it 15 days or more and Publication 527 says you report all the rental income and divide your expenses between rental and personal use. If the house also counts as a home, your deduction for rental expenses can be limited. Your tax professional runs those numbers, and the lending side is in second home vs. investment property at the Jersey Shore.

What about the town's own rules?

Check them before you count on any rental income. In an April 2026 notice to municipalities, the Department of Community Affairs said short-term rentals are "largely subject to municipal ordinance" and that many municipalities have adopted ordinances authorizing and regulating them. State law lets towns issue licenses for rentals "for a term less than 175 consecutive days for residential purposes by a person having a permanent place of residence elsewhere."

Read the ordinance for the exact town you're buying in, and ask the municipal clerk what registration or license it requires. If the home is in a condo or homeowners association, read its governing documents for rental terms too.

How should you run the numbers before you buy?

Gross rent isn't what you keep. Before an offer, line up the rent you expect against the taxes on your bookings, platform fees, the town's requirements, insurance and the carrying costs. I'm a former New Jersey home builder and remodeler, so you'll also get my read on what the house needs before it's ready for guests.

Compare the options in short-term vs. long-term rentals in New Jersey. See how I work with second homes and waterfront homes on the Luxury page and the Waterfront page, get the full checklist in the Luxury & Waterfront Guide, and if you already own a shore house, start with a home value estimate.

Frequently Asked Questions

Does Airbnb collect New Jersey occupancy tax?

When a guest books and pays through a transient space marketplace, the marketplace collects and remits the sales tax, the State Occupancy Fee and any municipal occupancy tax. The Department of Community Affairs uses Airbnb as its example of a marketplace.

Do I charge sales tax if I rent my shore house directly?

Not if you offer fewer than three units for rent in New Jersey. Since August 9, 2019, direct rentals by those owners aren't subject to sales tax or the State Occupancy Fee.

Do I report rent if I rent the house for less than 15 days?

Publication 527 says that if you use the unit as a home and rent it less than 15 days during the year, you aren't required to report the rental income and expenses. Confirm it with your tax professional.

This is general information, not legal, tax or lending advice. Rates, town ordinances and IRS rules change, so confirm your situation with the NJ Division of Taxation, your municipality and your tax professional.

About the author

Dennis Mark Interdonato is a REALTOR® and Master CDRE® who leads The Dennis Mark Group at Keller Williams Realty Ocean Living in Point Pleasant, NJ, helping buyers and sellers throughout New Jersey make their next move, with Monmouth and Ocean County as home base. Read more about Dennis Mark.

Keep reading

• Buying a second home at the Jersey Shore: second home or investment property?
• Can you use a 1031 exchange for a vacation home?
• Short-term rental vs. long-term rental in New Jersey
• Watching the market before you buy? Read the monthly market report.
• Have a question this didn't answer? Send it to Dennis Mark and it may become the next article.