New Jersey Real Estate Transfer Fee
Jul 21, 2021 | Written by: | Share
Sellers of New Jersey real estate are sometimes surprised to find that they are responsible for the payment of a fee that is charged by all counties in the state at the time of the closing. This realty transfer fee, sometimes called the RTF, has been in effect since 1968. The purpose of the RTF is to offset costs related to cataloging the state’s real estate deals each year. All New Jersey counties share the same rules and procedures for the realty transfer fee.
The RTF is based on the consideration (usually the purchase price) as set forth in the deed from the seller to the purchaser. Calculating the amount of the RTF is not simple – there is a range of levels from $2.00 for every $500 of consideration not in excess of $150,000, to $6.05 for every $500 of consideration in excess of $1,000,000. In addition, the fee is also based on the “class” of the property – from ‘residential’ to ‘commercial’ or ‘farmland.’ Fortunately, there are several on-line calculators which will calculate the correct RTF, such as http://www1.njcountyrecording.com/njcr/Account/TransferFeeCalculator.
There are some partial exemptions for the RTF. An Affidavit of Consideration must be filed with any deed in which a full or partial exemption is claimed from the RTF. There are sixteen reasons listed in the Affidavit of Consideration instructions for full exemption from the RTF. In addition, there are partial exemptions for sellers who are 62 years of age or older, blind or disabled, or for properties that qualify as low- or moderate-income housing or new construction. If property is owned jointly by spouses, only one needs to qualify for the exemption to apply.
The State also charges a related tax to the buyers of properties where the consideration exceeds $1 million, called the NJ “mansion tax.” This is a statewide fee that applies to transfers of deeds in New Jersey on Class 2 residential and Class 4A commercial properties above $1 million. It is equal to 1% of the total sale, with some exceptions. Properties subject to the mansion tax may not have a mansion on them. If a large parcel of farmland containing a dilapidated farmhouse is sold for over a million, the fact that there is a residential dwelling on the lot may result in the buyer being charged the mansion tax even if the farmhouse is not habitable.
Parties who are working on a budget for a sale or purchase of real estate should consult an attorney and determine the impact of the RTF and the mansion tax on their bottom line.
Lori K. MacWilliam, Esq. focuses her law practice on real estate, estate planning & administration, and general corporate matters. Please feel free to contact her at 908-735-5161 or via email.
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Any statements made herein are solely for informational purposes only and should not be relied upon or construed as legal advice.