STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Assemblyman BRIAN BERGEN
District 26 (Morris and Passaic)
SYNOPSIS
Exempts transfers of residential real property between family members from inheritance tax.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act exempting certain transfers of residential real property from the inheritance tax and amending chapter 34 of Title 54 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. R.S.54:34-4 is amended to read as follows:
54:34-4. The following transfers of property shall be exempt from taxation:
a. Property passing to or for the use of the State of New Jersey, or to or for the use of a municipal corporation within the State or other political subdivision thereof, for exclusively public purposes.
b. Property passing to a beneficiary or beneficiaries having any present or future, vested, contingent or defeasible interest under any trust deed or agreement heretofore or hereafter executed by a resident or nonresident decedent, to the extent that the trust fund results from the proceeds of contracts of insurance heretofore or hereafter in force, insuring the life of such decedent, and paid or payable, at or after the death of such decedent, to the trustee or trustees under such trust deed or agreement.
c. Property passing to (i) a trustee or trustees of any trust deed or agreement heretofore or hereafter executed or (ii) to a trustee or trustees of a trust created by the will of a decedent, by virtue of any contract of insurance heretofore or hereafter in force insuring the life of a resident or nonresident decedent and the proceeds of which are paid or payable at or after the death of such decedent to such trustee or trustees for the benefit of a beneficiary or beneficiaries having any present or future, vested, contingent or defeasible interest under such trust deed, agreement or will.
d. That part of the estate of any decedent which passes to, for the use of or in trust for any educational institution, church, hospital, orphan asylum, public library or Bible and tract society or to, for the use of or in trust for any institution or organization organized and operated exclusively for religious, charitable, benevolent, scientific, literary or educational purposes, including any institution instructing the blind in the use of dogs as guides, no part of the net earnings of which inures to the benefit of any private stockholder or other individual or corporation; provided, that this exemption shall not extend to transfers of property to such educational institutions and organizations of other states, the District of Columbia, territories and foreign countries which do not grant an equal, and like exemption of transfers of property for the benefit of such institutions and organizations of this State.
e. That part of the estate of any decedent who has heretofore died, or may hereafter die, received, either heretofore or hereafter, by the legal representatives of such decedent, whether directly from the United States, or through any intervening estate or estates, by reason of any war risk insurance certificate or policy, either term or converted, or any adjusted service certificate, issued by the United States. Nothing contained in this subsection e. shall entitle any person to a refund of any tax heretofore paid on the transfer of property of the nature aforementioned; and provided further, that the exemption provided for in this subsection e. shall not extend to that part of the estate of any decedent composed of property of the nature aforementioned, when such property was received by the decedent before death.
f. The proceeds of any contract of insurance heretofore or hereafter in force insuring the life of a resident or nonresident decedent paid or payable at or after the death of such decedent to any beneficiary or beneficiaries other than the estate or the executor or administrator of such decedent.
g. Any transfer, relinquishment, surrender or exercise at any time or times by a resident or nonresident of any right to nominate or change the beneficiary or beneficiaries of any contract of insurance heretofore or hereafter in force insuring the life of such resident or nonresident irrespective of whether such transfer, relinquishment, surrender or exercise of such right took place or whether the proceeds of such policy were paid or payable, before or after the taking effect of this act.
h. The value of any pension, annuity, retirement allowance, return of contributions, or benefit payable by the Government of the United States pursuant to the Civil Service Retirement Act to a beneficiary or beneficiaries other than the estate or the executor or administrator of a decedent.
i. The value of any annuity payable by the Government of the United States pursuant to the Retired Serviceman's Family Protection Plan or the Survivor Benefit Plan to a beneficiary or beneficiaries other than the estate or the executor or administrator of a decedent.
j. The value of any pension, annuity, retirement allowance or return of contributions, regardless of the source, which is a direct result of the decedent's employment under a qualified plan as defined by section 401(a), (b) and (c) or 2039(c) of the Internal Revenue Code, payable to a surviving spouse, or a domestic partner as defined in section 3 of P.L.2003, c.246 (C.26:8A-3), and not otherwise exempted pursuant to this section or other law of the State of New Jersey.
k. Residential real property passing to a family member who has co-ownership of the residential property.
As used in subsection k:
"Residential real property" means any parcel of residential real property, including land or, in the case of condominiums, an interest in a lot of land, which real property shall consist of a single one-or two-family dwelling, including appropriate garages or other outbuildings.
"Co-ownership" means ownership by two or more family members who are exempt from the transfer inheritance tax, and brothers, sisters, cousins, nieces, nephews, aunts, uncles, sisters-in-law, and brothers-in-law.
(cf: P.L.2003, c.246)
2. This act shall take effect immediately and apply to taxable years beginning on or after January 1 next following the date of enactment.
STATEMENT
This bill amends the New Jersey transfer inheritance tax to eliminate the tax on transfers of residential real property between family members who co-own residential real property. Currently, transfers of property between family members are only exempt from taxation if the family members are spouses, civil union partners, domestic partners, children, legally adopted children, mutually-acknowledged children, grandchildren, great-grandchildren, parents, grandparents, and stepchildren. This bill amends the New Jersey transfer inheritance tax to exempt property transfers between certain family members who co-own the residential real property. This bill will take effect immediately and apply to taxable years beginning on or after January 1 of the year next following enactment.