Robert and his wife Patricia purchase a home in Summit, New Jersey for $1,500,000 as their primary residence, taking title as tenants by the entirety. At closing, the settlement agent informs them of their mansion tax obligation. Robert insists that because they are married and taking title as tenants by the entirety, they qualify for an RTF exemption similar to the spousal transfer exemption. Which of the following is the MOST accurate response to Robert's claim?
Correct Answer
C) Robert is incorrect; the spousal transfer RTF exemption applies only to transfers between existing spouses, not to new arm's-length purchases, and the mansion tax applies to this transaction
The RTF spousal transfer exemption under N.J.S.A. 46:15-5 applies specifically to transfers between spouses (e.g., one spouse conveying to the other, or transfers incident to divorce), not to arm's-length purchases from a third-party seller where the buyers happen to be married. Because Robert and Patricia are purchasing from an unrelated seller for $1,500,000, the full RTF applies to the seller, and the 1% mansion tax applies to Robert and Patricia as buyers because the price exceeds $1,000,000. Taking title as tenants by the entirety does not create an RTF or mansion tax exemption.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
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