Thomas, a Pennsylvania resident, sells his New Jersey rental property in Camden for $950,000. At closing, Thomas's attorney informs him that he will be subject to both the standard Realty Transfer Fee AND a GIT/REP withholding. Thomas argues that this is double taxation because he already pays Pennsylvania income taxes. Which response BEST explains the legal basis for both charges?
Correct Answer
D) The RTF is a deed recording fee paid to the state, while the GIT/REP withholding is an income tax prepayment on the NJ gain; they are separate obligations with different legal bases
The standard Realty Transfer Fee (N.J.S.A. 46:15-5) is a deed recording fee imposed on all grantors, both resident and non-resident, when a deed is recorded in New Jersey. It is not an income tax. The GIT/REP withholding (N.J.S.A. 54A:8-9) is a separate mechanism requiring non-resident sellers to prepay estimated New Jersey Gross Income Tax on the gain from the sale of NJ real property. Because NJ has the right to tax income earned within its borders regardless of the seller's state of residence, both charges are legally distinct and simultaneously applicable. Thomas's Pennsylvania tax obligations do not eliminate his NJ obligations.
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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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