With Motels Dwindling, Seaside Heights Aims to Start Collecting ‘Airbnb Tax’

The Hershey Motel property, being offered for sale in Seaside Heights, Dec. 2022. (Photo: Daniel Nee)

A short-term rental tax ordinance has been on the books in Seaside Heights since 2023, but officials are planning to cooperate with the state to collect the revenue from renters this season for the first time.

For years, Seaside Heights generated revenue to support essential services – the cost of which surges each summer – through a 3 percent tax on hotel and motel rooms. But in recent years, not only has the stock of rooms in the borough diminished significantly as motels have been torn down in favor of condominiums and townhomes, the rental market as a whole has shifted to digital booking services such as Airbnb and VRBO, plus a few local startups. A tax on short-term rentals booked through such services was always contemplated to evolve with the market, replacing the revenue generated from the hotel-motel tax as conditions changed. The problem, however, has been collecting that revenue.

“We’re looking at how to recoup this percentage from Airbnb,” said Mayor Anthony Vaz. “That’s the revenue that is going to be looked at to reduce taxes to pay for those services.”

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Seaside Heights, as a municipality, has not had any real mechanism to enforce the short-term rental tax. Visitors pay their bill online, and the money is transmitted to property owners’ bank accounts. Meanwhile, the property owners have no way to charge visitors for the tax – as a hotel normally would – and even if that problem were to be overcome, collections would come with its own share of oversight and processing costs. With the help of officials in neighboring Point Pleasant Beach, their Seaside Heights counterparts believe they will be able to solve the problem for the 2025 season with the help of the state Department of Taxation.

The process includes sending a copy of the borough’s short-term rental ordinance, which imposes the same 3 percent tax on short-term rentals that had been long imposed on hotel stays, to the state. The state then acts as the bridge between Seaside Heights and the digital booking services.

“What happens … is whoever at the Department of Taxation gets this letter has the job of calling Airbnb, VRBO – whatever short-term marketplaces are allowed to do business in New Jersey – and tell them to start sending Trenton the tax that Seaside is supposed to collect,” explained Borough Administrator Anthony Vaz.

The state maintains a list of services that are authorized to offer properties for rent in New Jersey, and officials at that level of government have the capacity to have Airbnb, VRBO and similar services add the 3 percent local tax to the checkout list, like state sales taxes or cleaning fees. The state then transmits the revenue to the borough, noting which properties generated what amount. That, in and of itself, makes enforcement of the tax fair for both taxpayers and homeowners.

“With the hotels and motels, we never saw what the owners were making at the properties,” said Vaz.

Seaside Heights’ ordinance setting the tax rate falls under Chapter 110 of the borough code, which was passed by the council in 2023. In addition to the traditional hotel-motel tax, a paragraph was added to reflect the proliferation of “transient space marketplaces” such as Airbnb and VRBO. The ordinance notes that the tax must be paid by the purchaser, not the property owner.