1% Realty Transfer Fee – Mixed Class Properties

In The Ridgewood Commons Group, LLC, v. Director, Division of Taxation, (Docket No. 010859-2007) (NJ Tax Court, 2009), the New Jersey Tax Court held that where a grantee elects to combine the consideration paid totaling in excess of $1,000,000 for more than one property in a single deed without separately stating the amount paid for each property, the 1% Realty Transfer Fee imposed on the grantee is to be calculated only on the respective value of the consideration paid for the property that was of a classification subject to the Fee.

In response to the Tax Court’s decision, the Division of Taxation has revised instruction for completing form RTF-1EE (Affidavit of Consideration for Use by Buyer).   For subject transfers, the grantee should check off the box in paragraph (2)(C) of the form, circling the appropriate classifications for properties that may be subject and not subject to the Fee under N.J.S.A. 46:15-7.2.  The grantee should then indicate the Equalized Assessed Value (“EAV”) of each property. The ratio of the EAV of the property that is subject to the 1% Realty Transfer Fee over the EAV of the property not subject to the fee times the total amount of consideration will provide an amount to be attributed to the consideration paid for the property or properties covered by N.J.S.A. 46:15-7.2. If that amount is greater than $1,000,000, the 1% Fee will be due on that amount.