Bulletin: NJ000090

Dear Associates:

The second Realty Transfer Fee increase in two years takes effect on August 1, 2004. [P.L. 2004, c.66 (A3115/S1713)]. Although formal guidance has not yet been issued by the State, it is anticipated that the new fee structure shall be applied to all deeds received by the County Clerk for recording on or after Monday, August 2nd. We look forward to a smoother transition than that occurring when the RTF was increased last July.

Before last July's increase, the Realty Transfer Fee contained two components [N.J.S.A. 46:15-7(1)&(2)], the Basic Fee ($3.50 per thousand of consideration) plus an Additional Fee ($1.50 per thousand over 150 thousand). It was easy to determine the correct fee: $3.50 per thousand for the first $150 thousand, $5.00 per thousand, thereafter.

The law that went into effect on July 15, 2003, (N.J.S.A. 46:15-7.1) added a Supplemental Fee of fifty cents per thousand for the first $150,000; $1.70 per thousand from $150 to $200 thousand; and $2.80 per thousand thereafter. That increase has not been changed and remains in effect.

The new law adds a fourth component to the Realty Transfer Fee called a 'general purpose fee'. The new general purpose fee only applies to deeds for consideration of over $350,000, but in those instances where the new fee applies it is calculated from the first dollar of consideration. That means that two charts are required to determine the correct realty transfer fee; one chart for consideration of less than $350,000 (not including the general purpose fee) and one chart for consideration over $350,000 (including the general purpose fee. The new law makes no changes to the realty transfer fee for consideration of less than $350,000.

Please note that although the realty transfer fee statutes provide fees based upon cost per $500 of consideration, we have doubled those sums and set forth the cost per thousand of consideration so that the computation of the correct realty transfer fee shall be easier to understand.

The following chart should be used to determine the standard realty transfer fee for consideration of less than $350,000:

When the deed consideration is over $350,000 the realty transfer fee is determined by adding the four components (basic, additional, supplemental and general purpose fees) to obtain the fee per thousand as follows:

A partial exemption against the basic fee remains in effect for a one or two family residence, owned and occupied by a senior citizen (over 62), or blind or disabled person or for the sale of low or moderate income housing. The rate applied continues to be One ($1.00) dollar per thousand for the first $150 thousand and $2.50 per thousand thereafter. This partial exemption is not affected by the new law. The following charts show the RTF rates for transactions entitled to the senior citizen/low income housing partial exemption:

There is no partial exemption for deeds involving new construction. The new construction Realty Transfer Fee is the same as applied to standard transactions. The new law, however, allocates a portion of the new construction RTF to specific State funding programs. In order that the County Clerk may properly determine what deeds fall within the new construction category, the words "NEW CONSTRUCTION" must be included in capital letters on the top of page one of the deed and an Affidavit of Consideration (RTF-1) must be appended to the deed. Failure to do so is punishable as a disorderly person's offense.