VESTED LAND SERVICES LLC
New Jersey Transfer Tax Calculator, Income Tax Forms,
Affidavits of Consideration and Related Materials
All calculations are effective as of August 1, 2004
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.
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.
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 went into effect on August 1, 2006.
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.
At ALL purchase closings, the seller must provide one of the following :
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.
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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