New Jersey Realty Transfer Fee, Mansion Tax, and Gross Income Tax

What is the New Jersey Realty Transfer Fee?

New Jersey law assesses a realty transfer fee on deeds (or other instruments) that transfer New Jersey real estate.¹ The seller is responsible for the realty transfer fee by default.² The parties may change the default rule by negotiating who will pay the tax. Regardless of who pays, the tax must be paid when the deed is recorded.³

How is the Realty Transfer Fee Calculated?

The realty transfer fee is calculated based on the consideration—the amount the new owner paid for the property. The fees are determined using a sliding scale and can be confirmed on the Division of Taxation’s NJ Realty Transfer Fees page. To allow the state to calculate the tax, the seller must state the consideration received:

• In a statement in the deed;
• In the notary acknowledgment or the proof of the deed’s execution; or
• In an affidavit by one of the parties to the deed or a party’s legal representative.⁴

The State of New Jersey publishes an Affidavit of Consideration for Use by Seller (Form RTF-1) for reporting consideration. In any of the following scenarios, Form RTF-1 must be attached to the deed even if the actual consideration is stated in the body of the deed or the notary acknowledgment:

1. The seller claims a full or partial exemption from the New Jersey realty transfer fee (see below).⁵
2. The transfer involves commercial property, industrial property, apartment complex, or any other “Class 4” property.⁶
3. The transfer involves new construction.⁷

What is the Realty Transfer Fee Rate?

New Jersey’s realty transfer fee consists of several related fees based on the deed’s consideration.⁸ The fees are assessed at different rates, and not every fee applies to every deed. The total realty transfer fee due when filing a deed consists of the combined amount due for the following fees:

• State basic fee. The state basic fee is $1.25 for each $500.00 of consideration.⁹
• County basic fee. The county basic fee is $0.50 per $500.00 of consideration.¹⁰
• Additional fee (over $150,000.00). The additional fee is $0.75 per $500.00 of consideration over $150,000.00.¹¹
• General purpose fee. The general-purpose fee applies to deeds for consideration over $350,000.00. The tax rate increases progressively starting at (a) $0.90 per $500.00 for consideration up to $550,000.00; (b) then $1.40 per $500.00 from $550,000.00 up to $850,000.00; (c) then $1.90 per $500.00 from $850,000.00 up to $1,000,000.00; and (d) $2.15 per $500.00 for consideration above $1,000,000.00.¹²
• Supplemental fee: The supplemental fee adds an extra (a) $0.25 per $500.00 of consideration up to $150,000.00; (b) $0.85 per $500.00 for amounts from $150,000.00 to $200,000.00; and (c) $1.40 per $500.00 for consideration over $200,000.00.¹³
• Supplemental fee for new construction. Deeds transferring property on which there is a new construction require an additional supplemental fee of $1.00 per $500.00 of consideration up to $150,000.00.¹⁴ New construction means an entirely new improvement that was not previously occupied or used for any purpose.¹⁵

What deeds are exempt from New Jersey realty transfer fee?

New Jersey law provides both full and partial exemptions from the realty transfer fee.

Full Exemptions

The realty transfer fee is inapplicable to any of the following deeds:

• A deed for consideration of less than $100.00.¹⁶
• A deed between husband and wife, or parent and child.¹⁷ A sale from a parent to a child and the child’s spouse is considered an exempt transfer if the child and spouse are legally married.¹⁸
• A deed recorded within 90 days following the entry of a divorce decree that dissolves the marriage between the parties to the deed (i.e., the grantor and grantee).¹⁹
• A deed by or to the United States of America, the State of New Jersey, or any instrumentality, agency, or subdivision thereof.²⁰
• A deed made solely to provide or release security for a debt or obligation.²¹
• A deed to confirm or correct a deed previously recorded.²²
• A deed issued following a sale for delinquent taxes or assessments.²³
• A deed that partitions the property.²⁴
• A deed by a receiver, trustee in bankruptcy or liquidation, or assignee for the benefit of creditors.²⁵
• A deed eligible to be recorded as an “ancient deed” pursuant to R.S.46:16-7 (repealed).²⁶
• A deed acknowledged or proved on or before July 3, 1968.²⁷
• A deed conveying a cemetery lot or plot.²⁸
• A deed in specific performance of a final judgment.²⁹
• A deed releasing a right of reversion.³⁰
• A deed previously recorded in another county with full realty transfer fee paid or accounted for, as evidenced by written instrument, attested by the grantee and acknowledged by the county recording officer of the county of such prior recording, specifying the county, book, page, date of prior recording, and amount of realty transfer fee previously paid.³¹
• A deed by an executor or administrator of a decedent to a devisee or heir to effect distribution of the decedent’s estate in accordance with the provisions of the decedent’s will or the intestate laws of this State.³²
• A deed issued by a cooperative corporation, as part of a conversion of all of the assets of the cooperative corporation into a condominium, to a shareholder upon the surrender by the shareholder of all of the shareholder’s stock in the cooperative corporation and the proprietary lease entitling the shareholder to exclusive occupancy of a portion of the property owned by the corporation.³³

Partial Exemptions

New Jersey’s realty transfer fee law also provides partial exemptions that reduce—but do not eliminate—transfer fee liability for qualifying deeds. The realty transfer fee is reduced for deeds that involve either:

1. Transfer of a one- or two-family dwelling owned and occupied by a senior citizen, blind person, or disabled person; or
2. Transfer of low- and moderate-income housing.³⁴

The first exemption requires all owners—other than spouses—to be within the preferred class. A transfer of jointly owned property is not exempt unless both co-owners meet the criteria or the non-qualifying co-owner is the qualifying co-owner’s spouse.³⁵

What is the New Jersey Mansion Tax?

Depending on the type of property involved, a buyer of New Jersey real estate may owe an additional tax—sometimes called a mansion tax—on transfers of real estate for consideration in excess of $1,000,000.00.³⁸ The mansion tax applies to deeds that transfer the following types of property:

• Residential property. This category includes residences for less than four families, including condominiums.³⁹
• Regular farm property. This category includes property used for agricultural or horticultural purposes if the property has a building or structure intended or suited for residential use (i.e., the property must include a residential farmhouse).⁴⁰
• Cooperative units. This category includes properties owned and held by a corporation or another legal entity where the shareholders or other co-owners each have a long-term exclusive lease (or similar arrangement) of a specific unit within the same building.⁴¹
• Commercial property. This category includes any income-producing property other than vacant land, a residential dwelling, farm property, industrial property, or a multi-family apartment building.⁴²

New Jersey charges mansion tax at a rate of 1 percent of the consideration stated in the deed.⁴³ The buyer is responsible for paying the tax unless the deed is exempt.

Deeds transferring property sold for under $1,000,000.00 or that that is not in one of the above categories do not require mansion tax. There are also three exemptions to the mansion tax:

1. Transfers to nonprofit organizations that have been recognized as tax-exempt for federal income tax purposes under Internal Revenue Code § 501(c)(3);
2. Transfers under a corporate merger or acquisition where the equalized assessed value of the transferred real property is less than 20 percent of the total value of all assets exchanged in the merger or acquisition; and
3. Intercompany transfers after January 1, 2021, between combined group members as part of the unitary business.⁴⁴

Affidavit of Consideration for Use by Buyer

An Affidavit of Consideration for Use by Buyer (Form RTF-1EE) must be attached to every deed for property that is sold for more than $1 million and for every deed transferring commercial property. The Affidavit of Consideration for Use by Buyer is used to calculate the mansion tax or, if the transfer is exempt, to claim the exemption. A deed that transfers commercial property or property sold for over $1,000,000.00 cannot be recorded unless the Affidavit of Consideration for Use by Buyer is attached.⁴⁵

What is the New Jersey Nonresident Gross Income Tax?

A sale of New Jersey real estate owned by a nonresident is subject to nonresident gross income tax—sometimes called GIT. New Jersey law requires nonresidents to estimate and pay their gross income tax liability for a sale of New Jersey property.⁴⁶ The nonresident seller must pay the tax amount to the recording officer at the time the deed is submitted for recording.⁴⁷

The tax is calculated by applying the highest state gross income tax rate (10.75 percent) to the amount of estimated gain from the sale.⁴⁸ Even if there is no gain, the minimum amount of the tax is 2 percent of the consideration for the sale.⁴⁹

The nonresident gross income tax is withheld from the sale and remitted to the state at the time of recording. Sellers who end up owing less than the withheld amount may request a refund either by filing Form A-3128 or through their New Jersey income tax returns.

New Jersey Resident vs. Nonresident

A seller is considered a New Jersey resident if the seller is:

• An individual that is either domiciled in New Jersey or maintains a permanent residence in New Jersey and spends more than a total of 183 days per year in the state;
• The estate of a person domiciled in New Jersey at the time of their death;
• A trust that received the property through the will of a person domiciled in New Jersey at the time of their death or from a person domiciled in New Jersey when either the property was transferred to the trust or the trust became irrevocable.⁵⁰

Any other sellers are considered nonresidents for purposes of the gross income tax.⁵¹

Forms Required for Nonresident GIT Withholding

Each nonresident seller of New Jersey real estate must complete one of three forms:

1. Nonresident seller making payment. A Nonresident Seller’s Tax Declaration (Form GIT/REP-1) is used when the seller is a nonresident that is making an estimated gross income tax payment at the time of closing. The form is filed at the time of recording.
2. Nonresident seller prepaying tax. A Nonresident Seller’s Tax Prepayment Receipt (Form GIT/REP-2) is used if the seller is prepaying the tax (paying the tax before closing). The original form and tax payment is submitted to the Division of Taxation before closing. The Division of Taxation will then return the filed form to the seller for recording along with the deed.
3. Resident seller or nonresident seller claiming exemption. A Seller’s Residency Certification/Exemption (Form GIT/REP-3) is used if the seller is a resident of New Jersey or a nonresident that is exempt from the gross income tax.

The forms include various exemptions that nonresident sellers may claim, depending on the circumstances.

1. N.J.S.A. §§ 46:15-5 – 46:15-11.
2. N.J.S.A. §§ 46:15-7(a); 46:15-7.1(a).
3. Porreca v. LaFerriere, 542 A.2d 102 (N.J. App. Div. 1988).
4. N.J.S.A. § 46:15-6(a).
5. N.J.S.A. § 46:15-6(b).
6. N.J.S.A. § 46:15-7.2(d)(1); N.J.A.C. §§ 18:12-2.2(e)-(g).
7. N.J.S.A. § 46:15-6(c).
8. N.J.S.A. §§ 46:15-7(a)(1)-(3); 46:15-7.1; 46:15-7.2.
9. N.J.S.A. § 46:15-7(a)(1)(a).
10. N.J.S.A. § 46:15-7(a)(1)(b).
11. N.J.S.A. § 46:15-7(a)(2).
12. N.J.S.A. § 46:15-7(a)(3).
13. N.J.S.A. § 46:15-7.1.
14. N.J.S.A. § 46:15-7.1(a)(2).
15. N.J.S.A § 46:15-5(g).
16. N.J.S.A. § 46:15-10(a).
17. N.J.S.A. § 46:15-10(j).
18. See https://www.state.nj.us/treasury/taxation/lpt/rtffaqs.shtml.
19. N.J.S.A. § 46:15-10(p).
20. N.J.S.A. § 46:15-10(b).
21. N.J.S.A. § 46:15-10(c).
22. N.J.S.A. § 46:15-10(d).
23. N.J.S.A. § 46:15-10(e).
24. N.J.S.A. § 46:15-10(f).
25. N.J.S.A. § 46:15-10(g).
26. N.J.S.A. § 46:15-10(h); see N.J.S.A. § 46:26A-4(b) for current recording requirements for “ancient documents” including deeds.
27. N.J.S.A. § 46:15-10(i).
28. N.J.S.A. § 46:15-10(k).
29. N.J.S.A. § 46:15-10(l).
30. N.J.S.A. § 46:15-10(m).
31. N.J.S.A. § 46:15-10(n).
32. N.J.S.A. § 46:15-10(o).
33. N.J.S.A. § 46:15-10(q).
34. N.J.S.A. § 46:15-10.1(a).
35. N.J.S.A. § 46:15-10.1(a)(1).
36. N.J.S.A. § 46:15-10.1(b).
37. N.J.S.A. § 46:15-7.1(a)(2).
38. N.J.S.A. § 46:15-7.2.
39. N.J.A.C. § 18:12-2.2(b).
40. N.J.A.C. § 18:12-2.2(c).
41. N.J.S.A. § 46:8D-3.
42. N.J.A.C. § 18:12-2.2(e).
43. N.J.S.A. § 46:15-7.2(a).
44. N.J.S.A. § 46:15-7.2(b).
45. N.J.S.A. § 46:15-7.2(d).
46. N.J.S.A. § 54A:8-9(a).
47. N.J.S.A. § 54A:8-10(a).
48. N.J.S.A. § 54A:2-1.
49. N.J.S.A. § 54A:8-9(a).
50. N.J.S.A. §§ 54A:1-2(m), (o).
51. N.J.S.A. § 54A:1-2(n).