Costs of Selling Land in New Jersey

Selling Costs in New Jersey: What to Know

In New Jersey the seller pays the realty transfer fee when the deed is recorded. The rate climbs in tiers as the price rises, and seniors and some other sellers get a reduced rate.

Sellers who live outside New Jersey must also make an estimated income tax payment at closing. This page covers each cost, who pays, and a worked example for a $25,000 lot.

New Jersey realty transfer fee

The Division of Taxation says the realty transfer fee is imposed on the seller when the deed for a sale is recorded (Realty Transfer Fee). It is based on the price in the deed, or in some cases the assessed value divided by the Director's Ratio.

For a sale of $350,000 or less, the rate is $2.00 per $500 on the first $150,000, $3.35 per $500 from $150,000 to $200,000, and $3.90 per $500 from $200,000 to $350,000. Higher sales use a higher schedule that starts at $2.90 per $500.

Seniors, blind or disabled sellers and low and moderate income housing get a partial exemption. Claim it on the Affidavit of Consideration, Form RTF-1. Some deeds are fully exempt, such as a sale for less than $100, a sale for delinquent taxes, a deed on partition, and a deed from an executor to an heir under a will or the intestate laws.

The fee on sales over $1 million (the old "mansion tax")

New Jersey adds a graduated percent fee when the price is more than $1,000,000. It runs from 1% up to 3.5% of the whole price, and the seller is responsible for it.

It applies only to certain property classes: Class 2 residential, Class 3A farms with a home, Class 4A commercial and Class 4C co-ops. Vacant land is Class 1, so a vacant lot is not on that list. Ask the county tax board if your lot has a mixed or changed class.

GIT/REP forms for sellers

Every seller files a GIT/REP form with the deed. A New Jersey resident uses GIT/REP-3 to certify residency, and no payment is due at closing.

A nonresident individual, estate or trust uses GIT/REP-1 and pays estimated income tax at closing. The payment is the gain times 10.75%, but not less than 2% of the price. It is a prepayment, so you file a New Jersey nonresident return and get back any excess.

Who pays what by custom

The seller pays the realty transfer fee and any graduated percent fee by statute. The buyer usually pays to record the deed and buys the title insurance policy, but the contract decides. Each side pays its own lawyer.

Property taxes are usually prorated to the closing date. New Jersey bills quarterly, so check which quarters are paid before closing.

Attorney or title company closing

Lawyers handle many New Jersey closings, especially in the northern part of the state. In other areas a title company often runs the closing. Either way, the GIT/REP form and the transfer fee are handled at recording.

Capital gains basics: federal and state

Your taxable gain is the sale price minus your selling costs and your basis. Basis is usually what you paid plus improvements such as surveys, roads or wells. For inherited land, basis is generally the value on the date of death; see IRS Publication 551.

If you owned the land for more than one year, the federal government taxes the gain at the long-term rates of 0%, 15% or 20%, based on your income. Land held one year or less is taxed at your ordinary income rate. See IRS Topic 409. Higher earners can also owe the 3.8% net investment income tax (IRS Topic 559).

The home sale exclusion covers your main home. A separate vacant lot does not usually qualify on its own; see IRS Topic 701. The closing agent normally reports the sale to the IRS on Form 1099-S.

New Jersey taxes the gain as regular income at graduated rates from 1.4% to 10.75% (NJ tax rate schedules; NJ income tax rates). This page is general information, not legal or tax advice. Confirm the details with the county office or a tax professional before you sign.

How selling to a cash buyer changes the costs

On a listed sale, the seller usually pays an agent commission plus their share of the closing costs. When you sell your New Jersey land to EasyLotBuyer, there are no fees or commissions and we pay the closing costs. That includes the items in the table that a seller would normally pay at closing.

We make a cash offer within 24 hours and can close in as few as 7 days. If the land has back taxes, they are paid at closing from the sale. We also buy land with liens, title issues or no road access, and land held by heirs or an estate.

Your capital gains tax is still your own matter, because it depends on your basis and income. The closing agent will still report the sale on Form 1099-S.

• No agent commission
• No transfer tax or recording costs out of your pocket: we pay closing costs
• Back taxes paid at closing from the sale
• Try the offer calculator or the land value estimator
• See selling land in New Jersey