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Be Prepared To Pay The New Jersey Realty Transfer Tax When You Sell Your Home

stock-photo-412835-refinance.jpgNew Jersey imposes a “realty transfer fee” on the sale of property. Sellers of real estate in New Jersey are often surprised by this fee, which is akin to a sales tax. The amount of realty transfer fee changes with the sales price, it is about half a percent for houses selling for $225,000, and increases to about one percent for sales of $1,000,000, as the sales prices go higher, the realty transfer fee continues to increase. You can check the realty transfer fee for a particular sales price using an online calculator. The realty transfer fee, along with the mansion tax, must be paid to the county clerk of the county where the property is located simultaneously with the recording of the deed.

If a home is sold for more than one million dollars it is also subject to the mansion tax in addition to the realty transfer fee. The mansion tax requires the buyer to pay a tax of one percent of the purchase price. Properties which are subject to the mansion tax include residential property, farm property with a house and commercial property. Properties which are not subject to the mansion tax include vacant land, farm property with no residence, farm property which qualifies for farmland assessments, industrial property and apartment buildings with five or more units, cemeteries, public schools, churches and certain properties owned by charitable organizations.

Certain transfers of property are exempt from paying the realty transfer fee and the mansion tax. Exempt transfers include, among others:

– Properties sold for less than $100 where there is no outstanding mortgage on the property;
– Properties transferred from or to the United States of America or the state of New Jersey;
– Properties transferred to provide security or as a release of security for a debt;
– Deeds which are recorded to confirm or correct a prior deed;
– Deeds which can be recorded as “ancient deeds”;
– Properties transferred between husband and wife;
– Properties transferred between parent and child;
– Properties transferred according the terms of a will;
– Properties transferred within ninety days of the entry of a divorce decree which dissolves the marriage between the grantor and grantee
There are also partial exemptions from the realty transfer fee for individuals over the age of 62 years, for legally blind persons and for disabled persons, provided the sellers own and occupy the property at the time of the sale, are residents of New Jersey, are all joint owners qualify for the partial exemption, and the property is a one or two family residence. To qualify for an exemption or a partial exemption An Affidavit of Consideration for Use by the Seller must be prepared and recorded with the Deed.

If you need assistance buying or selling real property, call our attorneys at (973) 890-0004 or e-mail us.

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