The Realty Transfer Fee (Tax)
Feb. 4, 2023
The Realty Transfer Fee (RTF) is an important part of the process of selling property in New Jersey. When the deed is transferred to the buyers, the seller must pay the RTF, which is based on the property's sales price. The RTF is usually collected at the real estate closing by the legal representatives or title insurance agents responsible for recording the deed at the county registry offices. Funds from the RTF are then shared between the state and counties. The state portion of the revenue is allocated to neighborhood revitalization, shore protection, and the state's general fund.
The Realty Transfer Fee is a tax that is imposed on the recording of deeds evidencing transfers of title to real property in the State of New Jersey. The realty transfer fee is due at the time of the deed transfer. The Fee is calculated based on the amount of consideration recited in the deed or, in certain instances, the assessed valuation of the property conveyed divided by the Director's Ratio. For example, the RTF is $3,215.00 for the sale of a home for between $399,500.01 and $400,000.00.
Exemptions to the RTF include sales for consideration of less than $100, transfers made by or for federal agencies acting within the state, transfers made in accordance with a will or in releasing a right of reversion, and transactions that involve cooperative corporations moving assets or converting spaces into condominiums. Qualifying senior citizens aged 62 or older, qualifying blind persons, and qualifying disabled persons may also receive a partial exemption from the RTF, depending on the total consideration.
Additionally, a supplemental fee to the RTF (the "mansion tax") is imposed on the seller of real property for the sale of certain transfers of real property over $1,000,000. This fee is 1% of the consideration recited in the deed. This fee applies to Class 2 Residential properties, Class 4A Commercial properties, and Class 3A farming properties, with certain exceptions. The buyer of real property in New Jersey must pay this supplemental fee, unless they are exempt from the additional fee.
Finally, the Controlling Interest Transfer Tax (CITT) is a 1% fee imposed on the buyer of a controlling interest in an entity that possesses, directly or indirectly, an interest in "classified" real property for consideration in excess of $1,000,000 in the state of New Jersey. The CITT is due on or before the last day of the month following the month in which the sale or transfer of the controlling interest is completed.