We're Being Forced Out of Hosting by New Laws & Airbnb's Lack of Support

So, I just found out recently that a law was passed in our New Jersey town across from New York City, about a year ago that completely forbids Airbnb. It doesn’t matter if you live on the property or not. It is ALL forbidden.

Then, this summer the New Jersey state government passed a new law - TAXING AIRBNB RENTALS. So, the city says it’s illegal and the state says it’s legal and they’re going to tax it. (So which is it)?

First thing is - Airbnb is NOT going to collect the occupancy taxes for all New Jersey hosts. (Just those in Jersey City).

So, in order to pay the taxes, we have to register with the state as a BNB and to register with the state, our town has to give permission. So, if the town doesn’t give permission, you can’t register with the state. And if you can’t register with the state - you can’t pay the tax!

Which means, surely, several years from now, some governmental agency will come knocking on the door to inform us we owe $20,000 in taxes plus $40,000 in penalties! You know whatever they do - they’ll make it some impossible amount to pay.

So, even if we collect the taxes now and save them for a time in which we would be allowed to pay them - they’ll surely add all kinds of penalties and fees that we wouldn’t have been able to collect from our guests (obviously).

Which means, we pretty much have to stop hosting.

Oh and also… since Airbnb refuses to collect the taxes for every host in this state - most hosts aren’t charging the taxes. They make no mention of them on their pages. Which means if we tell guests they have to pay an additional almost 12% for taxes, they’ll just go somewhere else.

Has anybody else faced problems like this?

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I know this doesn’t help, but under common laws, the illegality of an income doesn’t make it non-taxable. What makes it taxable is the character of the source, which is of an income nature.


I guess you could consult a lawyer, but locality zoning laws that determine what business you can do where are likely not going to be preempted by a state law that provides for the collection of a business tax. I think you’re sunk. So sorry. Did you check personally with your zoning office? (I would couch it as a hypothetical.)


I realize I’m in a different state from you, but why won’t AirBNB collect the taxes for you? Is that just current practice or they’ve said they won’t ever?

City law trumps state law in your particular case. The state is not saying it’s legal for YOU to have an AirBnB; they are taxing people who happen to live in cities where it is legal.


yes this is what was going on in Charleston SC for many years.
Now that they have made the regulations, they are not chasing the past deadbeats.
Yes my friends with rentals in Charleston put aside funds in case the govt came for the money.
Yes what you are going through is not uncommon.
See if you can get a state retail license and pay the state portion. Air is not "refusing " to collect. They can only collect after the enter into very complex arrangement with state govt. And they prefer not to, but have been forced into tax collection.
Start educating yourself with http://stradvocacy.org and see where you can go.
Yes many locations are making it impossible to continue.


Thanks guys. Good information from all of you.

Yes, that’s right. I believe this income is still taxable even though it’s currently illegal in my town to earn it. So, if we do continue, I will collect & save the tax. Although that puts us at a great disadvantage to the other area hosts who aren’t doing so. They’re just continuing on as if nothing happened!

But the crazy thing is, while they can still tax the income - we can’t legally pay it right now!

And my real fear is - what if they come after us later with penalties and fines? If they come after us just for the original tax - that wouldn’t be a problem. But if they add a ton of fines to it as they did in Hawaii, that would be a huge problem.

Why do I have a feeling the tax authorities in New Jersey wouldn’t be as lenient as they are in South Carolina!

That looks like a great site. I’ll check it out. Thanks for mentioning it!

And your idea on getting a state retail license is worth checking into.

Thanks everybody!

can you not just declare it as normal rental income? do they make a distinction between STR and LTR?

I’ve been a corporate tax consultant for a decade, and our usual method of dealing with income from undisclosed origins is to bring it to tax without any deductions. this minimisea the potential for queries associated with your tax filings. Letting them tax it upfront is better than saving it for future taxes, as you’re saving yourself from heavy fines and penalties. Does the agency enforcing the STR related regulations communicate with the revenue office? That’s another point to consider.


The hotel industry doesn’t like the competition that Airbnb produces. If you want to continue competing with a well-funded industry, you need to team up with other hosts in your area and put up a fight at City Hall.

Do you know who your city councilperson is? Do you make regular campaign contributions? Do you know the politics of short-term rental in your city?

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Can you raise your prices by 12% and just set aside some of what you earn, rather than ask for an additional 12% on top of the advertised price?

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Like @jkamm said - local law trumps state law in this regard, obviously. The town has the right to determine its own zoning restrictions. If short term letting in a private home is illegal in your town there is little you can do - that isn’t in defiance of the law, that is. What is the penalty?

@blueslippers it is not just the hotel industry. It is a quality of life issue for neighborhood residents, too. They, too, bring pressure to bear on local municipalities to curb Airbnb activity.

No, you can’t. It’s not the regular income tax they’re charging - we already pay that. It’s a hotel/motel tax they want to charge. It’s like a sales tax, totally separate from income taxes.

I agree. That’s why we’re seriously thinking about having to close down.

Who knows!? I have no idea. They just passed this law in July and it only took effect in October.

[quote=“blueslippers, post:9, topic:26807”]
you need to team up with other hosts in your area and put up a fight at City Hall.[/quote]
That’s a great idea. But finding out who they are and organizing them, is beyond me to do.

The mayor met with several of them after he had decided to pass this law and just before it passed. Basically he didn’t care what they had to say. He had already made up his mind.

Nope! Not even sure if they have a city council! It’s a very small town. I know who the mayor is and he makes himself very accessible so I could talk to him, but since the law has already passed, and he was the biggest promoter of it, I doubt there’s anything I could say that would change his mind.

Nope! And even if I did, my contributions would never be large enough to get an ear from the mayor.

Not really. The story is that the mayor started hearing complaints from a few residents and he suddenly decided he hated the idea. He said he wants to keep the fabric of our city as it always was. Where neighbors know neighbors. He believes the transient nature of Airbnb would rip the fabric of the neighborhoods! Stupid really. Our airbnb has brought us closer to our neighbors as we’ve asked them to help us out from time to time. Otherwise we never would have even met them!

It’s hard to imagine any hotel lobby in our town because there aren’t any hotels. The weird thing is - being on just the other side of NYC, makes Airbnb a gold mine for city residents. But one friend told me she believes the mayor and the city government would prefer to keep the residents poor (as they have always been) to keep them dependent on the city.

As far as I know there are no penalties right now - as long as you stop doing it as soon as you are caught.

I would pay the tax and keep on keeping on, the likelyhood of the city knowing what the state collects in tax is pretty low… Plus enforcement cost money, do they have a budget for this? I would take down all identifiable outside pictures, IB only so no pesky emails from a city employee (I doubt they would be able to IB with a city credit card) Let them figure it out…


Yep, that was exactly my first thought. I would happily pay the tax and let the city figure it out whenever they get around to it. But it is my understanding that we can’t pay the tax (because it’s a hotel/motel tourism tax) unless we reigster as a BnB. But we can’t register as a BnB because that has to go through the city - and the city won’t approve us!

And without that registration, there is no legal mechanism for us to pay the state tax. They won’t accept the tax from an individual resident! Only from a BnB! So that’s why we’re stuck. We can’t actually pay the tax.

If we could, I agree with you. The state would happily accept the tax and the city would probably never find out about it.

No, not that I know of. They’re just responding to specific complaints at this point. No offensive enforcement.

Yep, I did that a couple of years ago when we got a request through Air and suddenly the guy starts messaging us saying it’s illegal in our city. I don’t think it was at that time. Or it had just become illegal and we didn’t know about it.