Who Pays the Real Estate Transfer Tax in New Jersey?
Gain clarity on New Jersey's realty transfer fee. Understand who pays, common exceptions, and the process for all property transactions.
Real estate transactions in New Jersey involve various financial components, and one common element is the New Jersey Realty Transfer Fee (RTF). This fee applies to the transfer of property ownership within the state. Understanding the nature of this fee and the parties typically responsible for its payment is important for anyone engaging in a property transaction.
Understanding the New Jersey Realty Transfer Fee
The New Jersey Realty Transfer Fee (RTF) is a state-mandated charge applied to the transfer of real property ownership. It was established in 1968 primarily to track real estate sales across the state. This fee applies to virtually all direct transfers of real property where a sale price is involved.
The RTF also serves as a revenue source for various state initiatives. Funds generated from the RTF are allocated to programs such as neighborhood revitalization, shore protection efforts, and the state’s general fund. This fee underscores the state’s interest in regulating and deriving revenue from the conveyance of real estate titles.
General Responsibility for Payment
In the vast majority of real estate transactions in New Jersey, the seller is responsible for paying the New Jersey Realty Transfer Fee. This applies to both residential and commercial property sales. The RTF is a cost associated with conveying the property title from the seller to the buyer.
The payment of the RTF is a prerequisite for recording the deed with the county. This ensures that the state’s interest in the transaction is satisfied before the change in ownership is officially registered. The seller remains liable for any underpaid or additional fees even after the deed is recorded.
Specific Scenarios and Exemptions
While the seller is generally responsible for the Realty Transfer Fee, specific situations and transaction types can alter this rule or provide complete exemption. As of July 10, 2025, for transactions exceeding $1 million, a Graduated Percent Fee (GPF) is imposed on the seller. This fee was historically paid by the buyer, but the responsibility has shifted. This GPF applies to residential, farm, and commercial properties meeting certain criteria, with rates increasing based on the sale price.
Numerous transactions are entirely exempt from the Realty Transfer Fee. These include:
Transfers where the consideration is less than $100.
Deeds solely to provide or release security for a debt or obligation, such as a mortgage.
Conveyances to or from the United States, New Jersey, or their agencies and subdivisions.
Transfers between immediate family members, such as spouses or between parents and children.
Corrective or confirmatory deeds.
Sales for delinquent taxes or assessments.
Transfers filed as part of a partition.
Deeds by a receiver, trustee in bankruptcy or liquidation, or an assignee for the benefit of creditors.
Certain partial exemptions exist for qualifying senior citizens (aged 62 or older), blind persons, disabled persons, and transfers involving low- and moderate-income housing. Claiming any exemption requires submitting an Affidavit of Consideration for Use by Seller (Form RTF-1) alongside the deed.
Calculation and Payment Process
The New Jersey Realty Transfer Fee is calculated based on the total consideration, or sale price, of the property being transferred. The fee structure operates on a graduated or sliding scale, meaning higher sale prices are subject to incrementally higher rates. For example, different rates apply to portions of the sale price within various thresholds, such as consideration not exceeding $150,000, or amounts exceeding $350,000. The fee may also be determined by the property’s assessed value in certain instances, particularly if the sale price is not clearly stated.
The practical payment of the Realty Transfer Fee occurs at the closing of the real estate transaction. A settlement agent, often a title company or an attorney, is responsible for collecting the fee from the appropriate party. This agent then remits the collected funds to the county clerk, who subsequently forwards them to the state treasury. Payment of the RTF is a mandatory step before the deed can be officially recorded with the county, thereby formalizing the transfer of ownership.