Real Estate and Then Some in Central NJ

Blog by Bill Keegan

Martinsville, New Jersey

Local real estate is the jumping off point for thoughts and conversations that can span a wide range of topics, from transportation to government and politics to food and wine. I will try to keep it pertinent to the local area, which would be Somerset, Morris, and Hunterdon counties. Feel free to comment on anything I post here. (I am reserving the right to review comments before I post them, to be sure nothing inappropriate gets published here.) Just click the Write a comment link below my post.

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Fight the New Jersey Home Sales Tax

Posted at Real Estate and Then Some in Central NJ by Bill Keegan

Nov. 29, 2007

Categorized in: Money Issues

Tagged with: new jersey, sellers, taxes

Are you familiar with the New Jersey Home Sales Tax? If you aren't, you should be.

The NJ Department of Taxation calls it a Realty Transfer Fee. We know it's a tax. And it gets collected every time real property changes hands in NJ. It's a rather hefty tax, paid by the seller. (Unless the property is sold for a price of $1 million or more. Then the seller still pays the tax, and the buyer pays an additional tax.) And the NJ legislature is considering making it even heftier, which will take even more money out of the pockets of home sellers. The New Jersey Association of Realtors wants to stop that from happening, and you can help. I'll tell you how shortly.

First, do you want to see the details, and understand how significant a fee we're talking about? OK.

The fee is actually computed on a stepped scale, based on the sale price of the property. From the Dept of Taxation website, I took the following description of the fee schedule:

1. $2.90/$500 of consideration not in excess of $150,000;
2. $4.25/$500 of consideration in excess of $150,000 but not in excess of $200,000;
3. $4.80/$500 of consideration in excess of $200,000 but not in excess of $550,000;
4. $5.30/$500 of consideration in excess of $550,000 but not in excess of $850,000;
5. $5.80/$500 of consideration in excess of $850,000 but not in excess of $1,000,000;
6. $6.05/$500 of consideration in excess of $1,000,000.

The state median home sale price was recently reported at $356,700. On that sale price, the Home Sales Tax is $2,799. In northern Somerset County, the average price is a bit higher. On a $600,000 house, the Tax is $5,185. If you sell your house for $1,000,000, which is certainly not an uncommon occurrence here, you have to pay a tax of $9,575. In addition to that, the state also charges the buyer of your home what we've come to call the Millionaires' Tax of 1 percent. Yep, an additional $10,000.

But even that's not enough. Legislation being considered in the state right now would allow each town to also charge a tax, in addition to what the state takes. If that legislation is passed and implemented locally, the seller of that $356,700 house would have to pay their Town an additional $357. The seller of the $600,000 could see the local tax bill in the amount of $600. And at $1 million, the town could tax you an extra $1,000.

Now the good part. How can you help the NJ Association of Realtors to fight this increase? We need everyone to contact their legislators, and let them know we're opposed to the idea, and to the tax increase. And we've made it easy to do that. Go to the web site we created to fight the NJ Home Sales Tax. You can get all the facts there. You can get an estimate of the tax you'd have to pay if you sold your house today and the increase if the legislation is passed. You can see which NJ legislators have pledged to stand with us and New Jersey homeowners against the tax. You can sign the petition to voice your opposition to the tax. Take a few minutes. Go do it now.

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