Sandra is purchasing a home in Teaneck, New Jersey for $975,000. Her broker tells her that the mansion tax does NOT apply to her purchase. Which of the following correctly explains why the mansion tax does not apply in this case?
Correct Answer
B) The mansion tax threshold is $1,000,000, and Sandra's purchase price of $975,000 falls below that threshold
New Jersey's mansion tax is a 1% tax imposed on the buyer of residential property when the purchase price is $1,000,000 or more. Because Sandra's purchase price of $975,000 is below the $1,000,000 threshold, the mansion tax does not apply to her transaction. The standard Realty Transfer Fee (paid by the seller) still applies.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
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