Acting NJ Governor Signs Laws Clarifying Real Estate Transaction Fees

On Thursday, January 20, 2005, Acting Governor Richard Codey signed into law two bills that will clarify laws implemented under Governor McGreevey’s administration.


The first bill clarifies the law that established a requirement for nonresidents to pay estimated New Jersey gross income tax (ranging between 2-8%) on gain from New Jersey real estate transactions prior to the recording of the deed. The law signed by Acting Governor Codey specifies that the minimum payment of estimated gross income tax on a sale of real property in New Jersey by a nonresident is 2% of consideration paid on the sale, which was the procedure prior to the inception of the withholding provisions put forth under Governor McGreevey. This law shall take effect immediately and be retroactive to August 1, 2004.

For more details reference: NJ Assembly, No. 3510, State of New Jersey, 211th Legislature, Introduced November 15, 2004


The second bill Acting Governor Codey signed into law revises the statute imposing a 1% fee on the buyer of residentially zoned real property purchased for more than $1,000,000. The new law eliminates zoning status as the basis for determining the 1% fee. The new law specifically places the 1% fee on those properties classified as:

(1) Class 2 “residential” for assessment purposes;

(2) (a) Real property that includes property classified for assessment purposes as Class 3A “farm property (regular),” but only if the property includes a building or structure intended or suited for residential use, and (b) any other real property, regardless of class, that is effectively transferred to the same grantee in conjunction with the
property described in (a); or

(3) A cooperative unit as defined in the cooperative recording law.

The law also exempts any transfer of property to a charitable organization that is exempt from federal income tax under section 501(c)(3) of the federal Internal Revenue Code.

The new law will take effect on February 1, 2005, but will apply retroactively to transfers of property occurring on or after August 1, 2004, which was the effective date of the statute that established the 1% fee. The new law provides for refunds to any transferee who has paid the fee but would not be subject to the fee under the provisions of this new law. Refund procedures have not yet been established by the Division of Taxation.

For more details reference: NJ Assembly, No. 3302, State of New Jersey, 211th Legislature, Introduced September 27, 2004 [Second Reprint]

Source: NJ Association of Realtors

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