Before you put together a property transfer in New Jersey, make sure you are aware of any potential financial implications.
Filing Fees
Filing fees are charged when you file paperwork with the county clerk’s office. In New Jersey, these start at $30-$40 for the first page of the document. An additional $10 fee is generally added for each further page [1, 2]. Various counties may have different fees, so check with the county clerk’s office ahead of time to get a better estimate of your costs.
Taxes
There are several potential tax implications to transferring real estate.
Real Estate Transfer Tax
The real estate transfer tax in New Jersey depends on a complex schedule. It ranges between approximately $2/$500 on considerations less than or equal to $150,000 and up to $6.05/$500 for considerations in excess of $1 million. Properly calculating real estate transfer taxes will ensure a smooth transfer for all parties.
Who Pays the Transfer Tax?
The real estate transfer tax is generally paid by the grantor of the property.
Exemptions to the Transfer Tax
New Jersey allows both partial and full exemptions to the transfer tax.
Partial exemptions include:
- Seniors over age 62
- Blind individuals
- Qualifying disabled individuals
- Property categorized as low- or moderate-income housing
Deeds are not eligible for more than one partial exemption.
Full exemptions for transfer taxes, including N. J. Stat. § 18:16-5.1, are:
- Considerations of less than $100
- Sales by or to the government
- Releasing security for a debt or obligation
- Correcting an error in a previously recorded deed
- Sales for delinquent taxes
- Sales for bankruptcy purposes
- Transfers between husband and wife
- Transfers between parent and child
- Transfers as part of a divorce agreement
- Executors transferring a property as part of a last will and testament
There are also circumstances under which transfer fees may be waived for corporate transfers, including those between parent and child companies.
The United States Gift Tax
The IRS assesses a gift tax on gifted property that exceeds a certain value, including real estate. Because quitclaim deeds are often used for gifted property transfers, both grantor and grantee should take the potential gift tax into account when managing the property transfer. While there are exemptions to the gift tax assigned by the IRS annually, real estate transfers typically exceed that value. New Jersey does not assign its own gift tax.
Capital Gains Tax
The capital gains tax is assessed on the amount the value of the property increases between its purchase and its sale. Real estate can appreciate substantially in value over the time it is held. There may be exclusions to the capital gains tax for individuals who use the property as their primary residence for at least two out of five years or who are in government service and move under orders.
New Jersey also assesses a capital gains tax on the increased value of a home sale.
