Ocean City Agrees to Tax Increase on Selected Rentals

Ocean City Council members approved a 3% occupancy tax for short-term property rentals reserved through online travel providers such as Airbnb. According to the city's estimates, the new occupancy tax could net approximately $1.9 million in revenue for the resort town.

Ocean City Council adopted the new occupancy tax ordinance on July 17 on a 4-3 vote. The new regulation requires the visitor, not the property owner, to pay the tax for rentals.

According to The Cape May County Herald, Ocean City now joins Cape May City and Lower and Middle townships as communities that leverage a New Jersey statute allowing a 3% municipal occupancy tax. In Ocean City, the tax will be levied only on short-term rentals reserved online, not on rentals arranged through a real estate agent.

Voicing support for the occupancy tax, City Council member David Winslow dismissed arguments that the tax would hurt tourism in Ocean City. He said that collecting the tax involves low administrative overhead and directs money from the state to the municipality. 

City Council members who opposed the tax said that other methods of reserving accommodations allowed individuals to escape the occupancy tax altogether. For example, visitors who book through a real estate broker, those who pay a property owner directly, and those who stay in a traditional hotel or motel will not pay this new tax.

Council members Sam Barnes, Keith Hartzell, and Tony Polcini submitted “no” votes, while Winslow, Terry Crowley Jr., Jody Levchuk, and Pete Madden voted “yes” to form a voting majority.

The ordinance now goes to the state for review, which generally takes approximately 90 days. If approved at the state level, the ordinance will take effect following this summer's vacation rental season.