Bill Text: NJ A200 | 2024-2025 | Regular Session | Introduced
Bill Title: Eliminates supplemental realty transfer fee and one percent fee on transfers of certain commercial real estate and tax on sale of controlling interests in certain commercial real property.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Introduced) 2024-01-09 - Introduced, Referred to Assembly Community Development and Women's Affairs Committee [A200 Detail]
Download: New_Jersey-2024-A200-Introduced.html
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Assemblyman MICHAEL INGANAMORT
District 24 (Morris, Sussex and Warren)
Assemblywoman DAWN FANTASIA
District 24 (Morris, Sussex and Warren)
SYNOPSIS
Eliminates supplemental realty transfer fee and one percent fee on transfers of certain commercial real estate and tax on sale of controlling interests in certain commercial real property.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act eliminating the supplemental realty transfer fee, the one percent fee on the sale of certain commercial real property, and the tax on the sale of controlling interests in certain commercial real property, amending P.L.1968, c.49 and P.L.2004, c.66 and repealing various sections of statutory law.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 1 of P.L.1968, c.49 (C.46:15-5) is amended to read as follows:
1. As used in this act:
(a) "Deed" means a written instrument entitled to be recorded in the office of a county recording officer which purports to convey or transfer title to a freehold interest in any lands, tenements or other realty in this State by way of grant or bargain and sale thereof from the named grantor to the named grantee. A leasehold interest for 99 years or more or a proprietary lease of a cooperative unit and any assignment of a proprietary lease of a cooperative unit, shall be treated as a "freehold" for the purpose of this act. Instruments providing for common driveways, for exchanges of easements or rights-of-way, for revocable licenses to use, to adjust or to clear defects of or clouds on title, to provide for utility service lines such as drainage, sewerage, water, electric, telephone or other such service lines, or to quitclaim possible outstanding interests, shall not be "deeds" for the purposes of this act.
(b) The terms "county recording officer" and "office of the county recording officer" mean the register of deeds and mortgages in counties having such an officer and office, and the county clerk and his office in the other counties.
(c) "Consideration" means in the case of any deed, the actual amount of money and the monetary value of any other thing of value constituting the entire compensation paid or to be paid for the transfer of title to the lands, tenements or other realty, including the remaining amount of any prior mortgage to which the transfer is subject or which is to be assumed and agreed to be paid by the grantee and any other lien or encumbrance thereon not paid, satisfied or removed in connection with the transfer of title. The amount of liens for real property taxes, water or sewerage charges for the current or any subsequent year, or by way of added assessment or other adjustment, as well as of other like liens or encumbrances of a current and continuing nature ordinarily adjusted between the parties according to the period of ownership shall be excluded as an element in determining the consideration, notwithstanding that such amount is to be paid by the grantee.
In the case of a leasehold interest for 99 years or more as defined in subsection (a) of this section, the consideration shall be in the amount of the assessed value of the property at the date of the transaction for the purpose of levying local real property taxes adjusted to reflect the true value in accordance with the county percentage level established for the current year.
In the case of a proprietary lease of a cooperative unit or assignment thereof as defined in subsection (a) of this section, the consideration is the total price paid for the ownership interest held in conjunction with a cooperative unit, including the pro rata amount of any underlying mortgage or other obligation of the cooperative.
(d) "Blind person" means a person whose vision in his better eye with proper correction does not exceed 20/200 as measured by the Snellen chart or a person who has a field defect in his better eye with proper correction in which the peripheral field has contracted to such an extent that the widest diameter of visual field subtends an angular distance no greater than 20ø.
(e) "Disabled person" means any resident of this State who is permanently and totally disabled, unable to engage in gainful employment, and receiving disability benefits or any other compensation under any federal or State law.
(f) "Senior citizen" means any resident of this State of the age of 62 years or over.
(g) "New construction" means any conveyance or transfer of property upon which there is an entirely new improvement not previously occupied or used for any purpose.
(h) "Low and moderate income housing" means any residential premises, or part thereof, affordable according to federal Department of Housing and Urban Development or other recognized standards for home ownership and rental costs and occupied or reserved for occupancy by households with a gross income equal to 80% or less of the median gross household income for households of the same size within the housing region in which the housing is located, but shall include only those residential premises subject to resale controls pursuant to contractual guarantees.
(i) "Basic fee" means the fee established by paragraph (1) of subsection a. of section 3 of P.L.1968, c.49 (C.46:15-7), which fee shall consist of a State portion and a county portion as prescribed under that paragraph.
(j) "Additional fee" means the fee established by paragraph (2) of subsection a. of section 3 of P.L.1968, c.49.
(k) "General purpose fee" means the fee established by paragraph (3) of subsection a. of section 3 of P.L.1968, c.49.
[(l) "Supplemental fee" means the fee established by subsection a. of section 2 of P.L.2003, c.113 (C.46:15-7.1).]
(cf: P.L.2004, c.66, s.1)
2. Section 2 of P.L.1968, c.49 (C.46:15-6) is amended to read as follows:
2. In addition to other prerequisites for recording, no deed evidencing transfer of title to real property shall be recorded in the office of any county recording officer unless it satisfies the following requirements:
a. If the transfer is subject to any fee established under section 3 of P.L.1968, c.49 (C.46:15-7) [or section 2 of P.L.2003, c.113 (C.46:15-7.1)], a statement of the true consideration for the transfer shall be contained in the deed, the acknowledgment, the proof of the execution, or an appended affidavit by one of the parties to the deed or that party's legal representative.
b. If the transfer is exempt from any fee established under section 3 of P.L.1968, c.49 (C.46:15-7) [or section 2 of P.L.2003, c.113 (C.46:15-7.1)], an affidavit stating the basis for the exemption shall be appended to the deed.
c. If the transfer is of real property upon which there is new construction, the words "NEW CONSTRUCTION" in upper case lettering shall be printed clearly 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.
(cf: P.L.2004, c.66, s.2)
3. Section 8 of P.L.2004, c.66 (C.46:15-7.2) is amended to read as follows:
8. a. In addition to all other fees imposed under P.L.1968, c.49 (C.46:15-5 et seq.), there is imposed a fee upon the grantee of a deed for the transfer of real property:
(1) that is classified pursuant to the requirements of N.J.A.C.18:12-2.2 as Class 2 "residential";
(2) (a) that includes property classified pursuant to the requirements of N.J.A.C.18:12-2.2 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 subparagraph (a) of this paragraph; or
(3) that is a cooperative unit as defined in section 3 of P.L.1987, c.381 (C.46:8D-3)[; or
(4) that is classified pursuant to the requirements of N.J.A.C.18:12-2.2 as Class 4A "commercial properties"]
that is transferred for consideration in excess of $1,000,000 recited in the deed, which fee shall be 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.
b. (1) The fee imposed by subsection a. of this section shall not apply to a deed if the grantee of the deed for the transfer of real property is an organization determined by the federal Internal Revenue Service to be exempt from federal income taxation pursuant to paragraph (3) of subsection (c) of section 501 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.501.
(2) [The fee imposed by subsection a. of this section shall not apply to a deed if the transfer of real property is incidental to a corporate merger or acquisition and the equalized assessed value of the real property transferred is less than 20% of the total value of all assets exchanged in the merger or acquisition. A grantee shall claim this exemption from imposition of the fee at the time the deed is offered for recording by filing with the county recording officer such information, in addition to the affidavit of consideration filed by one or more of the grantee parties named in the deed or by the grantee's legal representative pursuant to subsection d. of this section, as the Director of the Division of Taxation in the Department of the Treasury may prescribe as to constitute a filing of a protest of the assessment of the fee and by paying any other recording fees not exempted pursuant to this paragraph. This additional information shall be forwarded by the county recording officer to the director along with the grantee's affidavit of consideration, and shall be deemed to be and have the effect of a protest of a finding by the director of a deficiency of payment of the fee filed on the date on which the deed is recorded.] (Deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)
c. The fee imposed by subsection a. of this section shall be subject to the provisions of the State Uniform Tax Procedure Law, R.S.54:48-1 et seq.; provided however, that notwithstanding the provisions of subsection a. of R.S.54:49-14, a taxpayer may file a claim under oath for refund at any time within 90 days after the payment of any original fee and that subsection b. of R.S.54:49-14 shall not apply to any additional fee assessed.
d. (1) [If a transfer includes property classified pursuant to the requirements of N.J.A.C.18:12-2.2 as Class 4 property of any type, an affidavit of consideration shall be filed by one or more of the grantor parties named in the deed or by the grantor's legal representative declaring the consideration and shall be annexed to and recorded with the deed as a prerequisite for the recording of the deed. The filing of an affidavit of consideration pursuant to this paragraph shall be in addition to the filing, if any, pursuant to paragraph (2) of this subsection.] (Deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)
(2) Whether or not the transfer is exempt, pursuant to subsection b. of this section or any other provision of law, from payment of the fee pursuant to subsection a. of this section, if a transfer includes property otherwise subject to subsection a. of this section, then an affidavit of consideration shall be filed by one or more of the grantee parties named in the deed or by the grantee's legal representative declaring the consideration and shall be annexed to and recorded with the deed as a prerequisite for the recording of the deed. [The filing of an affidavit of consideration pursuant to this paragraph shall be in addition to the filing, if any, pursuant to paragraph (1) of this subsection.]
(3) An affidavit of consideration filed pursuant to paragraph [(1) or paragraph] (2) of this subsection shall clearly and entirely state the consideration, the county and municipality in which the property is situate, and the block and lot description of the real property conveyed.
(4) One copy of each affidavit of consideration filed and recorded with deeds pursuant to this subsection shall be forwarded by the county recording officer to the Director of the Division of Taxation in the Department of the Treasury on the tenth day of the month following the month of the filing of the deed.
(cf: P.L.2006, c.33, s.1)
4. The following sections are repealed:
Section 2 of P.L.2003, c.113 (C.46:15-7.1);
Section 2 of P.L.2005, c.19 (C.46:15-7.3);
Section 2 of P.L.2006, c.33 (C.46:15-7.4); and
Section 3 of P.L.2006, c.33 (C.54:15C-1).
5. This act shall take effect immediately.
STATEMENT
This bill eliminates one of the four realty transfer fees, the supplemental fee. In addition, it repeals the one percent assessment on the selling price of commercial property transacted for more than $1 million, and the parallel tax on the sale of controlling interests in certain commercial real property. In so doing, the bill lowers the cost of property transactions and supports the real estate market.
The State capitalized on the recent real estate boom by creating two new realty transfer fee layers in 2003 and 2004 and by instituting a one percent assessment on residential properties selling for more than $1 million in 2004 and on commercial properties selling for more than $1 million in 2006. Now that the real estate market finds itself in a downward spiral, these actions drag down the market and dissuade property transactions.
The bill repeals the supplemental fee, which saves a seller of an existing $250,000 property $300, the seller of a new $250,000 property $600, and a seller of an existing $350,000 property $580. The supplemental fee, created in 2003, applies to the seller of non-exempt real property, provided that the seller is neither a senior citizen nor blind or disabled. The supplemental fee is a graduated fee that pertains to the full amount of the property transaction and has the following structure: $0.25 on each $500 of consideration on the first $150,000 of the value recited in the deed of transfer; $0.85 on each $500 of consideration between $150,000 and $200,000; and $1.40 on each $500 of consideration over $200,000. Of the revenue generated, counties retain $0.25 on every $500 of consideration, of which a portion shall be utilized under certain circumstances to finance public health services under the Public Health Priority Funding Act. The remaining revenue accrues to the State Extraordinary Aid Account to fund property tax relief. In addition, the supplemental fee effectively voided a partial exemption of $1.00 per $500 of consideration for the first $150,000 of the transaction price of property upon which there is new construction.
The bill also repeals the "one percent fee" that buyers of Class 4A "commercial properties" transacted for more than $1 million pay and the parallel tax on the purchaser in a non-deed transfer of a controlling interest in an entity that owns Class 4A "commercial properties". The buyer of a $2 million commercial property thus saves $20,000. Class 4A "commercial properties" are any kind of income-producing real property other than property classified as vacant land, residential property, farm property, industrial properties, and apartments.
