New Jersey’s transfer tax rules are difficult to navigate. The tax rate is variable (from $2 to $6.05 for every $500 of a home’s value) and scales the more expensive a home is. Sellers are in charge of paying this amount, though buyers will have a partial tax due for home purchases above $1,000,000.
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The below guide will walk you through how transfer taxes work in New Jersey.
Who pays transfer taxes in New Jersey: the buyer or the seller?
While some real estate contracts can be drawn up so that the buyer is responsible for paying all or some of the transfer taxes, in New Jersey, it's 100% the seller's responsibility. The only time a buyer will have to put any money towards transfer fees is when the total home sale is over $1 million.
How much are transfer taxes in New Jersey?
Most states have a fixed state level tax rate for real estate transfer taxes, but New Jersey has a more complicated approach. New Jersey has different rates set depending on the total value of the home being sold.
For example, in New Jersey, homes at or under $150,000 have a $2.00 tax per every $500 of value, home between $150,001 and $200,000 have a $3.35 tax per every $500 of value, and home between $200,001 and $350,000 have a $3.90 tax per every $500 of value.
Things become a bit more complex if you sell a home over $350,000. You're still expected to pay the $3.90 tax per $500 of value, up to the $350,000 mark. From there, you're taxed based on how many thousands of dollars over $350,000 your home sold for.
For instance, if your home sells for $400,000, you'd be taxed at $3.90 per $500 of value for the first $350,000 and would use the following guide to determine how the remaining $50,000 would be taxed.
Taxation on Homes Over $350,000 (starting after $350,000 mark)
- $150,000 or less - $2.90 per $500 of value
- $150,001 - $200,000 - $4.25 per $500 of value
- $200,001 - 550,000 - $4.80 per $500 of value
- $550,001 - 850,000 - $5.30 per $500 of value
- $850,001 - 1,000,000 - $5.80 per $500 of value
- $1,000,000+ - $6.05 per $500 of value
There are lower rates offered to senior citizens, blind, and disabled applicants, which can be found here. In addition, buyers who purchase a home over $1,000,000 will be charged a 1% transfer tax fee.
You can better calculate your estimated real estate transfer taxes using this online calculator or with the help of a qualified real estate agent.
You can't get around paying transfer taxes in New Jersey — it's just part of selling a house. However, Clever Partner Agents can compute the specific taxes you owe, and they can also help you maximize your savings.
They’ll work to get you the best deal possible, all for a low listing fee of 1.5%.
Can you deduct transfer taxes?
While many real estate taxes can be deducted at the end of the year, transfer taxes in new jersey are not able to be deducted. Neither the seller or buyer can deduct transfer taxes on their taxes.
The only exception occurs if the property is used as an investment or rental property, in which case the seller could deduct them as a work expense.
While transfer taxes can't be deducted, they can help lower your taxes since they can be deducted from the total selling price, saving the seller money on capital gains expenses at the end of the year.
When do you pay NJ transfer taxes?
Real estate transfer taxes are generally paid at the time of closing and should be factored into every seller's budget ahead of time. The total amount of transfer taxes due will be listed on both the seller and buyer's settlement forms.
New Jersey transfer tax summary
With how complex New Jersey’s transfer tax regulations are, you’ll want an experienced real estate agent to guide you through the process. Our Clever Partner Agents are from the biggest real estate brokerages in the country and can help you get the most out of your transaction.
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