Unfortunately the Seller does not walk away from a real estate closing with a check for the total sale’s price. The seller has certain costs and expenses which are deducted from the sales price. These include commissions due to the real estate agent; attorney fees; payoff of open mortgages, home equity loans and lines of credit; adjustments for taxes; and state transfer tax and an income tax for non-resident sellers.
Most of the fees are self explanatory, but two merit discussion. The realty transfer fee is a state mandated fee that every seller must pay. The fee is based upon the contract sale price which is the price reflected in the Deed. The fee is not reduced by way of credits for inspection issues. The fee is calculated using a mathematical formula. It averages out to be between .5 to 1% of the sales price. For sellers of low and moderate income housing and for sellers who are senior citizens, blind or disabled there is a reduced rate. A seller is considered a senior citizen if they are 62 years of age or older and actually live in the property.
In 2004 the State added another tax for out of state residents who sell Property in New Jersey. A non-resident tax payer who sells real estate must file an estimated gross income tax at closing of at least 2% of the sales price. This tax is in addition to the realty transfer fee. This tax really affects non-resident sellers who have rental property in New Jersey or who own a second home such as a beach or lake or mountain house. It does not apply to individuals who lived in the property for the past five years as their principal marital residence.
