New Jersey Bill of Sale - DOC

							                                 Realty Transfer Fee – S 3115

                                    By Miles S. Winder, III

                             Reprinted with Authors Permission



      For a second year in a row the New Jersey Legislature (not to be confused with
the New Jersey Devils) has raised the Realty Transfer Fee. The new law (Senate Bill
No.3115) is effective August 1, 2004.

      A new component has been added to the RTF, a “general purpose fee,” which
applies to transactions which exceeds $350,000 in recited consideration and is charged
on the entire. This “general purpose fee,” when applicable, is added to the other
components of the RTF (i.e. the basic fee plus the additional fee plus the
supplementa1 fee).

      The words “NEW CONSTRUCTION” (in upper case lettering) shall be printed
at the top of the first page of the deed, and an affidavit by the grantor stating that the
transfer is of property upon which there is new construction shall be appended to the
deed.” A grantor who does not sign and attach the affidavit disclosing the new
construction on the land is “guilty of a disorderly persons offense.”

      The second part of the RTF Law is even more startling. It imposes a brand new
tax on Buyers of Real estate where the price is greater than $1 million.

      The law states as follows, “there is imposed upon the grantee of a deed for the
transfer of real property zoned for residential use, whether improved or not, for
consideration in excess of $1,000,000 recited in the deed, a fee in an amount equal to 1
percent of the entire amount of such consideration, which fee shall be collected by the
county recording officer at the time the deed is offered for recording and remitted to
the “ State Treasurer not later than the 10th day of the month following the month of
collection for deposit into the General Fund.” Please note that there does not have to
be a structure on the property. It is the $1,000,000 threshold together with the zoning
and not the actual use that triggers the fee's application.

        Finally for Real Estate Lawyers there is yet more “good news.”
Lawyers must now act as collection agents for the Division of Taxation
where there is an out of state seller. The new law establishes a new
requirement for nonresidents to pay estimated New Jersey gross income tax
on gain on New Jersey real estate transactions. For sales or transfers of real
property occurring on or after August 1, 2004, the bill requires nonresident
individuals, estates and trusts who sell or transfer certain real property
located within New Jersey to pay estimated gross income tax to the Division
of Taxation, which estimated tax payment is calculated according to a
formula in the statute (based on federal income tax purposes), but may not
be less than 2% of the consideration for the sale of transfer stated in the
deed affecting the conveyance. The estimated tax form must be filed by the
nonresident taxpayer whether there is a gain or a loss on the sale of the
property. A nonresident transferor is exempt from the payment of estimated
gross income tax on the transfer of real property under the bill if:

          1. the real property being sold or transferred is used
   exclusively as the principal residence of the seller or transferor (if
   property other than the principal residence is being sold, then that
   other property is subject to this estimated tax payment procedure);
   or

          2. the seller or transferor is a mortgagor conveying the
   mortgaged property to a mortgagee in lieu of foreclosure with no
   additional consideration; or

          3. the seller, transferor or transferee is an agency or authority
   of the USA, an agency or authority of the State of New Jersey, or is a
   member of a protected lender's class (e.g. the Federal National
   Mortgage        Association,    the   Federal     Home       Loan     Mortgage
   Corporation, the Government National Mortgage Association, or a
   private mortgage insurance company).

      No    deed      covering    applicable   sales     will   be   recorded   unless
accompanied by an estimated tax form and the payment of any estimated tax
or unless the form includes a certification by the seller or transferor on the
deed that the estimated tax requirement does not apply to the sale or
transfer. The Division of taxation has not yet released any new forms or
regulations to implement this new law.

      Just to make certain that no group goes through the year unscathed the
legislature decided that municipal court lawyers should be abused as well when it
passed the surcharge bill for unsafe driving offenses.

      Now violations of N.J.S.A. 39:4-97.2 will now include a $250 surcharge. The
surcharge will be imposed on a one-time basis in municipal court and will be collected
by the court. The surcharge will be imposed and collected in addition to any fine
imposed. First and second offenses remain n no-point violations.

      As a result, a first offender charged with 39:4-97.2 may face a total cost in
municipal court of $436. ($150 fine + $6 assessments + $30 costs + $250 surcharge).
Also, remember, the fine amount can be doubled in construction zones and safe
corridors areas.

      A copy of the new laws may be obtained from the New Jersey state legislative
Internet web site at the following address: http://www.njleg.state.nj.

      Happy trials!