Princeton officials eye taxes, inspections for Airbnb rentals

Officials in Princeton want to look at whether it would be possible to tax and inspect Airbnb rentals. There are more than 400 listings on Airbnb for Princeton rooms, apartments, condominiums and houses.

Jersey City and Newark tax Airbnb rentals. The State of New Jersey also collects a tax on short-term rentals booked through sites like Airbnb. In the fall of 2018, Gov. Phil Murphy signed a law to collect the state’s 6.625 sales tax and a 5-percent occupancy tax for rentals booked on sites like Airbnb and VRBO. Municipalities can collect taxes of up to 3 percent under the new law.

At a governing body “retreat” Saturday at the Princeton Public Library, officials ranked goals for the year. Taxing Airbnbs was considered a “low-hanging fruit” item by officials.

Business Administrator Marc Dashield told the mayor and council members that taxing Airbnbs was more complicated than they assumed. Dashield said that the town would have to hire an inspector, and that dwellings would need to be inspected every time a short-term rental turns over.

Councilman David Cohen questioned whether Airbnbs would have to be inspected every time there is turnover. Cohen pointed out that hotel rooms are not inspected every time there is turnover. Dashield said that in shore communities, an inspector is sent out every time there is turnover. Because of the cost of hiring an inspector, Dashield asked whether taxing Airbnbs should be a priority.

Councilman Dwaine Williamson said that ideally, the charge the homeowner pays for the inspections would cover the cost of hiring in inspector.

Cohen said even if the governing body decides not to tax Airbnbs, officials may want to consider creating an inspection system for short-term rentals for safety reasons. He said when he was at the New Jersey League of Municipalities convention in November, he talked with an administrator in the housing office at Princeton University who was very concerned about short-term rentals and safety issues. Creating an inspection system for short-term rentals could be an easy lift, Cohen said. An inspector could check basic issues once a year, like making sure short-term rentals have smoke detectors that are working properly. Officials would need to determine how frequently inspections would be needed and what the fees would be. Officials said the safety inspection issue is something that the Princeton Health Commission could possibly explore.

Jersey City voted in late 2015 to tax Airbnb rentals. The city entered into an agreement with Airbnb to collect the tax from hosts. Newark followed suit in 2016. Planet Princeton contacted officials in Jersey City this week to find out details about the inspection process there. Jersey City officials said the city, in fact, does not conduct inspections of the Airbnbs.

Unlike Jersey City and Newark, some municipalities in New Jersey have decided not to embrace Airbnb and other short-term rental programs, instead creating ordinances banning or restricting short-term rentals. Some municipalities have done so to stop people from buying up housing to be used as short-term rentals, while others claim short-term housing tenants are a nuisance. In 2017, Montgomery officials voted to ban short-term rentals after receiving numerous complaints about an Airbnb rental in Belle Mead that was marketed as a party house by one renter. Neighbors complained about loud music, noise late at night, and trash on the streets when parties were held at the home by some Airbnb renters.

At the Jersey Shore, municipal ordinances regulating short-term rentals vary, and many towns have adapted to become more flexible in the era of Airbnb. Asbury Park, for example, adopted a more flexible ordinance to address such rentals. If a rental falls into one of five categories in Asbury Park, an annual inspection is required. There is no inspection every time there is renter turnover. In some shore towns, an inspection is required every time there is turnover. In others, landlords are required to keep an online log of short-term renter occupants, but an inspection is not required every time there is turnover. Some towns require inspections every year, while others require inspections every two or four years.

Share your thoughts

3 comments
  • Any consideration of regulating Airbnb rentals should make a distinction between those homeowners who rent out a room in their home, and those who rent out an entire property. Obviously, if someone lives in their home, they will be concerned with its safety.

  • I’m a New Yorker, born and raised in the 5 boroughs. Sure, the good schools in Princeton were a big part of our decision to relocate the family to Princeton, high taxes and all. But at this point, New Jersey’s completely unfair tax treatment of 403 (b) retirement plans (taxed) as opposed to 401(k) plans (not taxed) PLUS the abandonment of a new tunnel to support commuters and possibly mitigate some of NJ Transit’s abysmal service PLUS now talk of taxing homeowners who are attempting to defray some of the real estate tax burden imposed by the state with the highest real estate taxes in the country…MAN! If consultants were brought in by the state to devise a plan to drive people out, the state definitely got its money’s worth….and to think…I was really vacillating on whether to stay in NJ, now that my children have both graduated from PHS….crazy thoughts about a little extra income to defray those real estate taxes….wow…

  • Why do we have a Business Administrator who asserts something (a requirement that there needs to be an inspection between each booking) that is clearly untrue? The administrator should have brought a list of possibilities, including only having an annual inspection, to the meeting so that the Council has a list of choices. The Council should insist that its lead administrator be prepared and not give incorrect information.

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