Newark Reaches Deal With Airbnb, Will Tax Company 'At Same Rate As Hotels'

Newark, NJ - Newark will tax Airbnb.

On Tuesday, Newark city officials announced that the municipality and Airbnb - a website that helps people to list, find and rent lodging – have reached an agreement that would tax the company “at the same rate as hotels.”

“Until now, Airbnb has not been regulated and it has been very difficult to collect hotel taxes in small amounts from the many residents who offer their homes to visitors,” city officials stated in a news release. “Now, that will change. The agreement will have the company pay Newark's hotel tax and be regulated by the city.”

Officials estimate that the agreement will add $750,000 in revenue to the city the first year, an amount that “will grow as Airbnb expands in Newark.”

According to city officials, the agreement requires that residents renting their homes through Airbnb would no longer be responsible for dealing with tax issues. Instead, Airbnb will now become responsible for collecting the tax and sending it to the city. In addition to allowing residents to rent homes for less than 30 days, the measure will prohibit homeowners and renters from changing the character of their neighborhoods. It would also limit the number of properties that one user could rent to five to prevent the creation of informal Airbnb hotels.

Newark officials postulated that the deal has the potential to “draw tourism dollars to parts of the city that are rarely visited by tourists.”

According to the company, 74 percent of Airbnb users stay outside of the main hotel district, and 40 percent of their dollars are spent in the neighborhood where they stay.

Airbnb praised the agreement with Newark as a "smart, fair approach" to online home rentals.

"In cities that are interested in smart, progressive laws on home-sharing and collecting taxes on us, we want to work them," said Max Pomeranc, the company's regional head of public policy.

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