14 Aug We sold our home. Can we get a transfer tax refund?

Q. We sold our home in New Jersey on June 14, 2022 and paid an approximate 1% transfer tax. It was our understanding that this tax was related to New Jersey’s capital gains tax on the sale of property. Is that correct, or is the transfer tax a separate line item? How do I get a refund?
— Seller

A. Congrats on the sale of your home.

As you know, when you make a sale, the state wants to get its piece.

The capital gain tax and transfer tax are different expenses when it comes to selling a home in New Jersey, said Matt Rembish, a certified financial planner with JFL Total Wealth Management in Boonton.

He said there are capital gains on your property if you are selling your home for more than you bought it for.

“Long-term capital gains rates are taxed at either 0%, 15% or 20%, which is based on your income for the year,’ he said. “Homeowners can be eligible to exclude up to $500,000 of capital gains on a sale of a principal residence.”

What you call the transfer tax is really with “Realty Transfer Fee.”

“This is an additional expense paid by the seller only whenever there is a transfer of title by deed,” he said. “It’s a 1% fee based on the sales price of the property, and is required to be paid at the time of closing.”

Rembish said the Realty Transfer Fee was established in New Jersey in 1968 to offset the costs of tracking real estate transactions.

He said some people can receive partial exemptions from the Realty Transfer Fee: qualifying senior citizens aged 62 or older; qualifying blind persons; qualifying disabled persons; or if it’s for a property that is low and moderate income housing.

If you paid the full fee and qualified for some exemption, you can contact the Division of Taxation at (609) 292-7813 for questions about your claim and specific situation.

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This story was originally published on Aug. 14, 2023.

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