By Joe Sinagra | The Save Jersey Blog
The Realty Transfer Fee (RTF) was established in 1968 to offset the costs of tracking real estate transactions. It may be called a fee, Save Jerseyans, but in reality it’s another insidious stealth tax place upon New Jersey home owners. Sometimes this tax is referred to as an “exit tax.”
How does it work? The New Jersey Division of Taxation states that the Realty Transfer Fee is calculated based on the amount of consideration recited in the deed or, in certain instances, the assessed valuation of the property.
Why? This tax started out as a $350 flat fee paid to help support the recording of real-estate transactions such as the upkeep of books, records and maps keeping them up to date.
And what does the size or value of your property have to do with how much tax the seller pays? I would think in this day and age, with all the technology we have, that all of this record keeping should not be as involved as it once was. If the county clerk’s office where all these transactions get recorded, supposedly became more modern and efficient, why have the costs escalated other than being an easy money grab for the state as a guaranteed source of revenue.
These fees are nevertheless assessed to homeowners after they sell their house and are the seventh-largest source of tax revenue for the state.
Since 2003, when Jim McGreevey was governor, the state has increased the tax more than 80 percent, and municipalities increased it 103 percent.
The population of New Jersey in 1970 was 7,171,112, an 18 percent increase at the time. The population of New Jersey in 2008 was 8,698,879, a 21 percent increase over 1970 and a 43 percent increase over 1960. Is there any accounting of where this money goes with all those new homes and increasing revenue stream? Even if you live out of state and own a home in New Jersey, you are still subject to a 2 percent fee. If you live out of state and inherit a home in New Jersey, guess what: you aren’t exempt from paying the tax.
In April of 2014 Gov. Chris Christie said he would abolish realty transfer fees in New Jersey if the state lawmakers sent him such a bill. So what are the lawmakers waiting for? These officials were elected to office to represent their constituents and if they were serious about keeping their promises of lowering or containing taxes now would be a good time to verify their sincerity.
Governor Christie should be hounding our lawmakers to bring a bill to his desk. It will soon be a year and did it not resonate with any of our representatives?
The last time I researched the topic, the revenues from these fees were allotted as follows: 57 percent of the tax money went to the state’s general fund; 19 percent, state’s Extraordinary Aid Account (EEA); 18 percent, Neighborhood PNRF; 18 percent to the counties for general use; and 7 percent, Public Health Priority Fund.
Not one of those funds is for the recording of real-estate transactions. Can somebody tell me what the hell is going on, and why isn’t anyone looking out for the ones laying the tracks for this train?
Almost one year ago, I had pointed out in a Save Jersey article that “Many of you who count on the profit of your home to move into another home or out of state are hit with this regressive tax, also known as New Jersey’s ‘exit tax.’ The homeowner is penalized on all their years of hard work and investment that was put into that home, money taken from the equity that was built into the sale of that home.”
“Having risen four times since then (1968), increasing substantially each time, it is now used to fund general state expenditures, neighborhood preservation, public health, and shore protection.”
Nothing has changed and we let our pockets get turned inside out year in and year out. It’s like getting mugged in an alley every day but yet we keep taking the same path home.
Bob Ingle, senior New Jersey political columnist over Gannett, had observed in April of 2014, “The folks at Treasury predict the hated tax will bring in $287 million in the current budget and $325 million in the next budget that starts July 1. If real estate grows in value and more people leave, it could be even more money for the general fund.”
Ingle also noted the lack of will to do anything about it: “There are politicians who complain a lot but do nothing and there are those who take action even though the chances of success are dismal. Sen. Diane Allen is the latter. She’s taking on one of the state’s most hated laws, but the challenge has the chance of a snowball in hell. Republicans should unanimously get behind Allen’s bill in the Senate and introduce an identical one in the Assembly to remind people of the legacy left by Democrats Corzine and McGreevey.”
It has been almost a year; who supported Senator Allen’s bill?
April 2015 is coming and the tax man will be once again bang on our doors, but our legislators aren’t knocking down any doors to help the state’s taxpayers and yet they sit there scratching their heads wondering why people are leaving the state and why the revenue well is running dry.
If we can’t get this done with a Republican governor, does anyone think after 115 tax increases from two prior administrations headed by Democrats that it’s going to disappear anytime soon?
With elections coming up again in November, I’d like to know who is going to actually do something other than to stand at a podium and make an empty promise of doing something about taxes.
As homeowners and taxpayers, Save Jerseyans, I urge you to write the Governor and your local representatives to walk the walk rather than talk the talk.
Concept is right but some of your math is off a bit. If you expect to hold credibility with the inherently stupid, the math needs to add up.
As I stated John those were the figures from the last time I researched. I have been writing about this for several years.
I’m sure the numbers and percentages are much higher now.
The point is where is all the money going and why are we paying so much?
With all the homes built since 2003, and the increase in NJ population since 2003 why does it keep increasing and why is the money being used for purposes other than real estate transactions?
Thanks for the comment.