Taxes on your home when you die?

Ask NJMoneyHelp

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Q. Does the real estate transfer tax also apply to probating a residence to spouse or children?
— Planning ahead

A. New Jersey residents have a lot to keep track of when it comes to the various taxes that are assessed when you’re alive, and when you’re dead.

The New Jersey real estate transfer tax has been in place since 1968. The real name is the Realty Transfer Fee, said Charles Pawlik, a certified financial planner with Beacon Trust in Morristown.

“This fee is assessed on the sale of a home and is based on the sales price for that home,” he said.

Pawlik offered these examples: A home sold for $250,000 would have a Realty Transfer Fee of approximately $1,325, a home sold for $500,000 would have a fee of approximately $4,175 and one sold for $750,000 would have a fee of about $6,775.

“Homes sold for more than $1 million are also subject to a `mansion tax,’ which is an additional 1 percent fee that is assessed to the buyer of the home,” Pawlik said. “If a home was sold for $1.25 million, the Realty Transfer Fee would be approximately $12,600 for the seller, with the buyer responsible for a 1 percent fee — the mansion tax — amounting to $12,500.”

Certain transfers of property are exempt from paying the Realty Transfer Fee, Pawlik said.

He said exempt transfers include properties transferred between husband and wife, properties transferred between parent and child, and properties transferred according to the terms of a will.

So, he said, if a property is transferred to a spouse or a child by way of a will, a Realty Transfer Fee would not apply.

Pawlik said partial exemptions to the Realty Transfer Fee are also granted for specific situations such as to senior citizens (persons age 62 or older), blind persons, disabled persons and on property that is low and moderate income housing. You can find more details on the Division of Taxation website.

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