NJ Gross Income Tax Fees
Transactions occurring on or after August 1, 2004 involving nonresident individuals, estates or trusts that sell or transfer real property in New Jersey, require that an estimated Gross Income Tax payment be made prior to the recording of the deed. The payment must be remitted to the Division of Taxation Prior to closing or can be made at closing. The estimated payment is determined by multiplying the seller’s gain, as computed for tax purposes, times the Gross Income Tax highest rate of 8.97%. In no case may the estimated payment be less than 2% of the consideration paid. Prior to closing, sellers prepaying will complete the Nonresident Seller’s Tax Prepayment Receipt from GIT/REP-2 along with NJ 1040ES and file them at one of the Division’s regional branch offices. (Locations of these branch offices are listed on the Division’s Website shown below.) Sellers not prepaying must complete the Nonresident Seller’s Tax Declaration form GIT/REP-1 and make payment at closing.
- 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 Internal Revenue Code of 1986 for the property being sold.
- Seller is a mortgagor conveying the mortgaged property to a mortgagee in foreclosure or in a transfer in lieu of foreclosure with no additional consideration.
- Seller, transferor or transferee is an agency or authority of the United States of America, or the State of New Jersey, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, or a private mortgage insurance company.
- Seller is not an individual, estate or trust and as such is not required to make an estimated payment pursuant to N.J.S.A. 54A:1-1 et seq.
- The total consideration received is $1,000 or less and as such not required to make an estimated payment pursuant to N.J.S.A. 54A:1-1 et seq.
The new Gross Income Tax forms GIT/REP-1 Nonresident Seller’s Tax Declaration and GIT/REP-3 Seller’s Residency Certification/Exemption are available from the Division of Taxation offices or can be downloaded from the Division of Taxation’s website at www.state.nj.us/treasury/taxation. Form GIT/REP-2 Nonresident Seller’s Tax Prepayment receipt is only available at one of the Divisions of Taxation’s Regional Taxpayer Service Locations.
The buyer will submit the Seller’s Residency Certification/Exemption, the Nonresident Seller’s Tax prepayment Receipt, or the Nonresident Seller’s Tax Declaration and tax payment to the county clerk’s office when the deed is recorded. No deed for the sale or transfer of real property shall be accepted or recorded by the county recording officer without the simultaneous filling of the appropriate forms with any required payment of the tax due or proof of payment.
The GIT forms apply to the ‘Grantor’ only. Click on the GIT form below for a summary of its use.
All of these forms can be obtained by going to the DIVISION OF TAXATION website. On their web page you will see a category for ‘FORMS’; click on this and you will find a list of available forms, the GIT/REP forms will be there and can be printed. There are additional instructions that will print with the form. Please read them.
Questions on Chapter 55 and the new Gross Income Tax estimated payment requirements should be directed to (609) 292-6400. Click here for a list of FAQs about GIT forms.
For the purposes of this law, county recording officers shall act as the agents of the Director of the Division of Taxation. County treasurers are permitted to retain $10.00 per filing of the Nonresident Seller’s Tax Declaration form to offset additional direct expenditures incurred by the county recording officer and the county treasurer for the implementation of these responsibilities.
Attorneys, title insurance officers, and participants in real property transfers are urged to forward the necessary closing documents to the county recording officer as soon as possible to facilitate the implementation of the new laws.
For additional information on the rate increases, gross income tax requirements, or to download the newly devised Realty Transfer Fee forms, please visit the Division of Taxation’s Website at:
http://www.state.nj.us/treasury/taxation (Division of Taxation)