Robert, who lives in Florida, owns a rental property in Hoboken, New Jersey that he is selling for $620,000. At closing, Robert's settlement agent informs him that he is subject to an additional withholding on top of the standard Realty Transfer Fee. Which of the following best explains why this additional withholding applies to Robert's transaction?
Correct Answer
A) Robert is a non-resident seller and is subject to an additional non-resident withholding fee under NJ law
Under N.J.S.A. 54A:8-8 et seq. (the NJ Gross Income Tax Act non-resident withholding provisions) and related RTF rules, non-resident sellers of New Jersey real property are subject to an additional withholding at closing to ensure payment of NJ income taxes on any gain from the sale. Robert, as a Florida resident selling NJ property, qualifies as a non-resident seller and is subject to this additional withholding requirement. This is a distinct NJ-specific rule that applies on top of the standard RTF.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Depreciation is an accounting method of allocating the cost of an asset over its useful life, allowing investors to deduct a portion of the asset's cost each year.
Highest and best use is an appraisal concept that identifies the most profitable, legally permitted, physically possible, and financially feasible use of a property. It is the foundation of all property valuation.
Homestead portability allows homeowners to transfer a portion of their accumulated homestead tax savings to a new homestead in the same state.
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