Washington and New Jersey Transfer Taxes
Posted on Sep. 6, 2012

Whether they catch you coming or going, transfer taxes are a way of life across much of the country.  Here are some more unusual or extreme variations.

New Jersey imposes a Realty Transfer Fee (the so-called “Mansion Tax”) of 1% for the sale of commercial property, residential property, certain farm property, and cooperative units with a purchase price (or total consideration) in excess of one million dollars (the calculation is not a straight 1% so that the online calculator from various county websites is very helpful).  The fee is imposed on buyers; paid upon the recording of deeds and is accompanied by an Affidavit of Consideration for Use by Buyer (Form RTF-1EE). (N.J.S.A. 46:15-5 et seq.)

Washington State imposes a Real Estate Excise Tax.  The tax is payable by the seller of the property; however, if the seller fails to pay the tax, the buyer is liable for it.  In addition to the sale of property, the tax applies to the transfer of controlling interests (50% or more) in entities that own property in the State of Washington (RCW 82.45).  The state portion of the tax is 1.28% of the entire purchase price (or total consideration).  In addition, there may be county and city real estate excise taxes added to it.  It is considered to be one of the highest transfer taxes in the country.

Washington D.C. imposes both a significant Deed Transfer Tax (Title 47, Chapter 9) and a significant Deed Recordation Tax (Title 42, Chapter 11) totaling as much as 2.9% of the consideration given for the property.  What makes this more interesting is that for both taxes, if there is no consideration or nominal consideration given for the property, taxes are based on the fair market value of the property.  There are, however, lists of exempt transactions.  Similar to Washington State, a transfer is defined more broadly than just the sale of the property to include the transfer of an economic interest which also triggers the Deed Recordation Tax.

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jimAttorney James W. Peters

Jim has handled retail, distribution center, warehouse, storage facility and fuel center transactions from the eastern seaboard to the Pacific Coast and beyond.

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