Jersey shore town passes 3% tax on rentals booked on third-party services like Airbnb

OCEAN CITY, N.J. (WPVI) -- The beaches and boardwalk were packed with people enjoying their time in Ocean City on Friday.

For some renters in the popular beach town, a change is on the way.

On Thursday night, City Council approved a new 3% tax on rentals booked through online sites like Airbnb and VRBO.

"It's not astronomical. Say on a $2,500 rental, it's only $75. Most people are not going to leave Ocean City for $75," said Councilman Dave Winslow during the meeting.

It passed 4-3.

Proponents of the ordinance say the number of rentals booked through these online marketplaces has increased over the past five years.

Many of these online listings allow shorter stays than the traditional Saturday-to-Saturday rentals.

Councilman Jody Levchuk says it means more families visiting and more city resources used.

We spoke to some visitors who say a trip to the shore is expensive enough without this new local tax.

"I think it's getting too expensive across the board. The rentals are already expensive enough," said Bobby Mesmer of Sewell, N.J.

Others say they're fine with it to get the vacation home they want in the town they love.

"Three percent going back to the city and coming back into this, I think it would be okay," said Laura Fox of Warrington, Pa.

This doesn't take effect for 90 days, so we likely won't see the effects of this until next year's summer season.

The following statement was sent to Action News from Alain Xiong-Calmes, Public Policy Manager for Airbnb:

"Any tax adopted by the Ocean City should apply both to short-term rentals and hotels to comply with state law. Short-term rentals are an important part of New Jersey's economy, generating nearly $1.3 billion in economic activity for the state and driving guest spending in local communities, particularly in places with limited affordable hotel options. In Ocean City, where most guests come from within the New Jersey region, this short-term rental tax risks pricing out families seeking affordable stays with access to the coast and threatens the local businesses and attractions that rely on visitor spending from short-term rentals."

Attorneys for Airbnb also sent a letter to city officials saying this tax could result in litigation, arguing the tax should also apply to hotels, motels and short-term rentals across the board.