GROSS INCOME TAX (hide this)
At ALL purchase closings, the seller must provide one of the following :
- A. Seller's Residency Certification/ Exemption Form Download Form
- B. Nonresident Seller's Tax Declaration together with tax payment to the Clerk's/Register's office Download Form
- C. Nonresident Seller's Tax Prepayment Receipt View SAMPLE
Effective 12/23/2004, the State of New Jersey has issued form GIT/REP4A, Waiver of Seller's Filing Requirement of GIT/REP Forms and Payment for Corrected Deed With No Consideration. This new form is to be completed by the title owner recording a deed to which this form is attached for corrective or confirmatory purposes only which needs to be rerecorded or re-recorded due a typographical, clerical, property description or other scrivener error or omission and there is no consideration for the corrective or confirmatory deed that is subject to the Gross Income Tax estimated payment requirements under C.55 P.L. 2004 and is not covered by one of the other GIT/REP forms. The grantee will complete, date and sign the form. Download form.
In addition, an Affidavit of Consideration will still also be required setting forth the grounds for exemption from paying the Realty Transfer Fee based on the deed being a corrective deed.
In addition, NO estimated income tax payment or form is required as a condition for the recording of sheriff's deeds.
There are 5 categories of exemptions from the gross income tax. If one of the following exemptions is being claimed, a Seller's Residency Certification/Exemption form must be completed and submitted with the deed for recording:
- Seller is a resident of New Jersey and will be filing a resident Gross Income Tax return for the year of the sale.
- Seller will be claiming an income exclusion under Section 121 of the IRS Code of 1986 for the property being sold.
- Seller is a mortgagor conveying the property in foreclosure to the mortgagee or is conveying to a mortgagee by deed in lieu of foreclosure for no actual consideration.
- Seller, transferor or transferee, is an agency or authority of the United States of America, the State of New Jersey, the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), the Government National Mortgage Association (Ginnie Mae) or a private mortgage insurance company.
- Seller is not an individual estate or trust.
Non-resident sellers who are individuals, estates or trusts may pre-file and pre-pay the estimated gross income tax at a state tax office. The state will issue a Nonresident Seller's Tax Prepayment Receipt which is to be submitted to the recording office at the time the deed is presented for closing. Prior to closing, taxpayers prepaying will complete the receipt along with the NJ-1040-ES and file them at one of the Division regional branch offices. You can find the Division regional branch offices by clicking on the following link, then click on "Contact Us" and then click on "Regional Offices": http://www.state.nj.us/treasury/taxation Any questions regarding the above new taxes and forms may be directed to the Division of Taxation Taxpayer Services Branch at 609-292-6400.
If a non-resident seller has not prepaid the estimated gross income tax, a Nonresident Seller's Tax Declaration must be obtained together with payment of the estimated tax. The Declaration and payment must be submitted to the recording office at the time the deed is presented for recording.
The estimated tax is determined by multiplying the seller's gain times the Gross Income Tax highest rate of 8.97%. In no case may the estimated tax be less than 2% of the consideration paid. The law has been amended in January 2005 to confirm that even if there is no gain, or the gain is minimal, the seller must pay a sum equivalent to 2% of the gross consideration.
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