Maria and her husband Carlos are purchasing a single-family home in Princeton, New Jersey for $1,250,000. At closing, which of the following correctly describes the transfer-related tax obligations for this transaction?
Correct Answer
A) The seller pays the Realty Transfer Fee and Maria pays a 1% mansion tax on the full purchase price
Under New Jersey law, the Realty Transfer Fee (RTF) is the seller's obligation under N.J.S.A. 46:15-5. In addition, because the purchase price of $1,250,000 exceeds $1,000,000, the buyer (Maria and Carlos) owes the mansion tax of 1% of the full purchase price ($1,250,000 × 1% = $12,500). These are two separate and distinct fees — the RTF falls on the seller and the mansion tax falls on the buyer for qualifying residential transactions.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Homestead portability allows homeowners to transfer a portion of their accumulated homestead tax savings to a new homestead in the same state.
The income approach estimates a property's value based on the income it generates by converting net operating income into a value estimate using a capitalization rate. It is the preferred method for income-producing properties.
Many states have laws to limit how much property taxes can increase each year, regardless of market value fluctuations.
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