The Realty Transfer Fee is imposed upon the recording of deeds evidencing transfers of title to real property in the State of New Jersey. The Fee is required to be paid upon the recording of deeds conveying title to real property in New Jersey. The Realty Transfer 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. Payment of the Fee is a prerequisite for recording the deed. The R.T.F. 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. The Realty Transfer Fee replaced the expiring Federal Documentary Tax in 1968. The State of New Jersey and New Jersey’s twenty-one counties share Realty Transfer Fee proceeds. The County Treasurer’s Office remits Realty Transfer Fee revenues to the State Treasurer on the tenth day following the month of collection, using the official form RTF-2 that the Director of the Division of Taxation has prescribed. Property Administration personnel respond to questions on a daily basis that taxpayers, county recording officers, and title agencies ask about the Realty Transfer Fee, and how the Fee applies to individual transfers of real property.
The most current Realty Transfer Fee law enacted is Chapter 33, Laws of 2006, which imposes a 1% fee on buyers in transfers of Class 4A “commercial property” as defined in N.J.A.C. 18:12-2.2 and also on property classes 2 “residential;” 3A “farm property (regular)” but only if the property includes a building or structure intended or suited for residential use transferred to the same grantee with the farm property; and cooperative units, that incur the 1% fee for an entire consideration recited in the deed in excess of $1 million. The 1% fee cannot be prorated or arbitrarily allocated in a transfer; if there is one real estate parcel transferred that bears one or more of the aforementioned property classes, the 1% fee is incurred for the entire consideration as stated in the deed, acknowledgement, or Affidavit of Consideration for Use by Buyer. Chapter 33 took effect on August 1, 2006 and applies to transfers of property on or after that date. Chapter 33 mandates that buyers in deeds involving Class 4A “commercial property” sales recorded on or before November 15, 2006 that were transferred pursuant to a contract that was fully executed before July 1, 2006 and who remit the 1% fee shall have it refunded by filing a claim for refund with the Division of Taxation within one year following the recording date of the deed. The Division of Taxation requires documentation including deed photocopy, fully executed contract of sale signed by all parties, HUD-1 or other settlement statement fully executed by grantor and grantee, and any additional proofs that the Director of the Division of Taxation may require in order to process the refund claim.
A revised Affidavit of Consideration for Use by Seller (form RTF-1) and revised Affidavit of Consideration for Use by Buyer (form RTF-1EE) are additionally now required to be annexed to and recorded with deeds transferring Class 4 property of any type (commercial, industrial, or apartment properties) as a prerequisite for recording, whether the real property transfer is taxable or exempt from payment of the 1% fee.
For more information: Click here (a new POP up window will open)