Non-Exempt Transfers and New Construction
Senior Citizen/Blind or Disabled/ Low Income Housing
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| Transfer Tax Amount | |
| Mansion Tax | |
Minimum Estimated Gross Income Tax
(See explanation of the Gross Income Tax below)
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NEW CONSTRUCTION
The words NEW CONSTRUCTION must be printed in upper case letters at the top of the first page of a deed conveying property on which there is new construction. An Affidavit of Consideration is now required to be affixed to and recorded with all deeds transferring "new construction".
The words NEW CONSTRUCTION must also be printed in upper case letters at the top of the Affidavit of Consideration attached to said deeds.
The new construction affidavit must be executed by the Grantor ( seller ). It is a disorderly persons offense for failing to attach an affidavit when required.
NOTE : There is no reduced "New Construction" rate.
Download "Affidavit of Consideration" Form
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MANSION TAX
The Mansion Tax is paid by the purchaser. The Mansion Tax rate is 1% of the sales price when the price is more than $1,000,000. The Mansion Tax applies to all deeds where the land conveyed is classified under the following Administrative Codes (N.J.A.C. 18:12-2.2) :
1. Class 2 - The property is residential.
2. Class 3A - The property is a farm but only if the farm land contains a building or structure intended or suited for residential use.
3. Class 4A - The property is commercial other than industrial or apartment.
4. Class 4C- The property is a co-operative unit.
The following classes are not required to remit the mansion tax:
Class 1 - Vacant land
Class 4B - Industrial properties
Class 4C - Apartments (other than cooperative units)
Class 15 - Public property
The amended RTF-1EE Affidavit of Consideration for Use by Buyer must be used for all transactions over $1,000,000 regardless of property class and whether or not the mansion tax must be paid.
Please note that there is a space at the top of the RTF-1 and RTF-1EE forms that calls for the County Municipal Code.
The List of Codes can be found at Municipal Code List.
Furthermore, if the grantee is exempt from federal income taxation under IRC 501 (c)(3) or meets the requirements of the exempt transactions provided in N.J.S.A. 46:15-10, the transfer is exempt. The Mansion Tax Amendment is effective August 1, 2006. Commercial property deeds recorded on or before November 15, 2006 under a contract entered into before July 1, 2006 will get special treatment. The 1% fee must be paid upon recording. the fee will be refunded upon submission of a proper claim to the Division of Taxation.
The law also applies to non-deed transfers of a controlling interest ( over 50% ) in an entity that owns Class 4A property when the total consideration for transfer is in excess of $1,000,000. This provision is intended to prevent the avoidance of the new transfer tax by the sale of a company owning Class 4A property rather than a sale of the property itself. The fee shall not apply to a deed if a real property transfer is incidental to a corporate merger or acquisition and the equilized assessed value of the real property transferred is less than 20% of the total assets exchanged in the mergerof acquisition. A grantee claiming an exemtion from the 1% fee in such instances, when the deed is offered for recording, is now required to file a merger document in addition to an Affidavit of Consideration for Use by the Buyer. For additional information, see the copy of the Notice issued by the State of New Jersey, Division of Taxation annexed herein.
Amendatory Realty Transfer Fee Legislation document.
For transactions involving Class 4A properties subject to the additional realty transfer fee imposed on the buyer, you must complete Section (2) (A) of the RTF-1 and Section (2) (C) of the RTF-1EE. There is a reference to the Director's Ratio to be inserted as part of the calculation. The Director's Ratio is column 2 on the Table of Equalized Values for 2005 established by the Tax Court. The 23-page document listing ratios by county can be found at Director's Ratio link to table of equilized values as posted on Taxation's web site [scroll down to list item on the page].
In addition, it appears that the Treasurer's office has notified the counties that any deed received before August 1, 2006 will not have to pay the new tax even if not recorded until August 1, 2006 or later. See attached announcement sent out by the Union County Clerk's Office.
Questions regarding the changes in the statute requirements and whether a property is exempt from the Mansion Tax or questions in connection with any possible refund of taxes should be directed to the Division of Taxation. Their website is www.state.nj.us/treasury/taxation Copies of A4701 and S1982 ( The Commercial Property Mansion Tax) amending the Statute N.J.S.A. 46:15-7.2 can be found at www.njleg.state.nj.us
Download "Affidavit of Consideration for Use by Buyer" Form
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GROSS INCOME TAX
At ALL purchase closings, the seller must provide one of the following :
A. Seller's Residency Certification/ Exemption Form Download Form
B. Nonresident Seller's Tax Declaration together with tax payment to the Clerk's/Register's office Download Form
C. Nonresident Seller's Tax Prepayment Receipt View SAMPLE
Effective 12/23/2004, the State of New Jersey has issued form GIT/REP4A, Waiver of Seller's Filing Requirement of GIT/REP Forms and Payment for Corrected Deed With No Consideration. This new form is to be completed by the title owner recording a deed to which this form is attached for corrective or confirmatory purposes only which needs to be rerecorded or re-recorded due a typographical, clerical, property description or other scrivener error or omission and there is no consideration for the corrective or confirmatory deed that is subject to the Gross Income Tax estimated payment requirements under C.55 P.L. 2004 and is not covered by one of the other GIT/REP forms. The grantee will complete, date and sign the form.
Download form.
In addition, an Affidavit of Consideration will still also be required setting forth the grounds for exemption from paying the Realty Transfer Fee based on the deed being a corrective deed.
In addition, NO estimated income tax payment or form is required as a condition for the recording of sheriff's deeds.
There are 5 categories of exemptions from the gross income tax. If one of the following exemptions is being claimed, a Seller's Residency Certification/Exemption form must be completed and submitted with the deed for recording :
1. Seller is a resident of New Jersey and will be filing a resident Gross Income Tax return for the year of the sale.
2. Seller will be claiming an income exclusion under Section 121 of the IRS Code of 1986 for the property being sold.
3. Seller is a mortgagor conveying the property in foreclosure to the mortgagee or is conveying to a mortgagee by deed in lieu of foreclosure for no actual consideration.
4. Seller, transferor or transferee, is an agency or authority of the United States of America, the State of New Jersey, the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), the Government National Mortgage Association (Ginnie Mae) or a private mortgage insurance company.
5. Seller is not an individual estate or trust.
Non-resident sellers who are individuals, estates or trusts may pre-file and pre-pay the estimated gross income tax at a state tax office. The state will issue a Nonresident Seller's Tax Prepayment Receipt which is to be submitted to the recording office at the time the deed is presented for closing. Prior to closing, taxpayers prepaying will complete the receipt along with the NJ-1040-ES and file them at one of the Division regional branch offices. You can find the Division regional branch offices by clicking on the following link, then click on "Contact Us" and then click on "Regional Offices":
http://www.state.nj.us/treasury/taxation
Any questions regarding the above new taxes and forms may be directed to the Division of Taxation
Taxpayer Services Branch at 609-292-6400.
On line, questions may be answered at the
following Division of Taxation website, FAQS on GIT Forms Requirements for
Sale/Transfer of Real Property in New Jersey located at the following link :
http://www.state.nj.us/treasury/taxation/gitrepfaqs.htm.
If a non-resident seller has not prepaid the estimated gross income tax, a Nonresident Seller's Tax Declaration must be obtained together with payment of the estimated tax. The Declaration and payment must be submitted to the recording office at the time the deed is presented for recording.
The estimated tax is determined by multiplying the seller's gain times the Gross Income Tax highest rate of 8.97%. In no case may the estimated tax be less than 2% of the consideration paid. The law has been amended in January 2005 to confirm that even if there is no gain, or the gain is minimal, the seller must pay
a sum equivalent to 2% of the gross consideration.
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