New Jersey's Realty Transfer Fee: Partial Exemption for Qualifying Seniors
- On May 21, 2018
If you have sold a home or other real estate within the State of New Jersey, you have likely paid a fee known as the Realty Transfer Fee. The Realty Transfer Fee is generally based upon the consideration (the Purchase Price) recited in the deed and must be paid when recording deeds with the county recording officer. It is, effectively, a tax borne by the Seller of New Jersey real estate.
There are a number of complete and partial exemptions to the Realty Transfer Fee that may be available to certain owners of real estate. Since May is Older Americans Month, this post will focus on the partial exemption for qualifying senior citizens aged 62 or older.
To take advantage of the senior citizen partial exemption, the Seller (1) must be a resident of the State of New Jersey (2) must be aged 62 or older and (3) must occupy the home. If the Seller can satisfy these requirements, the savings can be substantial. The Realty Transfer Fee due upon the sale of a $500,000 home, for instance, would equal $4,175.00. If that same home is sold by a qualifying senior citizen, the reduced Realty Transfer Fee would equal $1,925.
One common misconception is that the senior citizen partial exemption is only available upon a sale of the seller’s primary residence. In fact, the Division of Taxation will recognize the senior citizen partial exemption on the sale of a vacation home, if the Seller satisfies the first two of the above conditions, occupies the home for at least 2 to 3 months out of the year and does not rent the home to others.
Another misconception is that the entire interest in the home must be owned by an individual or individuals who are aged 62 or older. Actually, an individual aged 62 or older who owns a home with one or more other individuals who are not yet 62 or older, may still be able to take the senior citizen partial exemption for that individual’s proportionate share of the proceeds.
In order for a qualifying senior citizen owner to take advantage of the senior citizen partial exemption, multiple owners (other than a husband and wife) must own the property as tenants in common rather than as joint tenants. Simply put, if, upon each owner’s death, their interest would go to their heirs, rather than to the other owner(s), then the senior citizen partial exemption may apply, as to the qualifying senior citizen’s share.
In such event, it is advisable to contact the Realty Transfer Fee Unit of the Division of Taxation, prior to closing, to obtain a letter stating a breakdown of fees that must be remitted to the County recording officer. That letter must be presented to the County recording officer together with the deed, to enable a qualifying senior citizen owner to take advantage of the partial senior citizen exemption for his or her share of the sales proceeds.
Real Estate and Estate Planning Attorneys in NJ
If you have questions regarding this or other residential real estate issues, please feel free to contact the attorneys at Davison, Eastman, Muñoz, Paone, P.A.to discuss how we may assist you.