A 5164

ASSEMBLY, No. 5164
STATE OF NEW JERSEY
222nd LEGISLATURE
�
INTRODUCED JUNE 1, 2026
Sponsored by:
Assemblywoman� LUANNE M. PETERPAUL
District 11 (Monmouth)
SYNOPSIS
���� Modifies additional fees and taxes imposed on certain
real property transfers valued over $1 million; expands imposition of fees and
taxes to real property classified Industrial Property and certain Apartments.
CURRENT VERSION OF TEXT
���� As introduced.
��
An Act concerning additional fees and taxes for certain
transfers of real property valued over $1 million and amending P.L.2004, c.66
and P.L.2006, c.33.
���� Be It
Enacted by the Senate and General Assembly of
the State of New Jersey:
���� 1.��� Section 8 of P.L.2004,
c.66 (C.46:15-7.2) is amended to read as follows:
���� 8. a. In addition to all other
fees imposed under P.L.1968, c.49 (C.46:15-5 et seq.), there is imposed a fee
upon the grantor of a deed for the transfer of real property:
���� (1)�� that is classified
pursuant to the requirements of N.J.A.C.18:12-2.2 as Class 2 ["residential"] �Residential
Property�;
���� (2) (a) that includes property
classified pursuant to the requirements of N.J.A.C.18:12-2.2 as Class 3A: ["farm
property (regular)"]
�Farm Property (Regular)� but only if the property includes a building
or structure intended or suited for residential use, and
���� (b)�� any other real property,
regardless of class, that is effectively transferred to the same grantee in
conjunction with the property described in subparagraph (a) of this paragraph;
���� (3)�� that is a cooperative
unit as defined in section 3 of P.L.1987, c.381 (C.46:8D-3); [or]
���� (4)�� that is classified
pursuant to the requirements of N.J.A.C.18:12-2.2 as Class 4A ["commercial
properties."]
�Commercial Property�;
���� (5)�� that is classified
pursuant to the requirements of N.J.A.C.18:12-2.2 as Class 4B �Industrial
Property�; or
���� (6)�� that is classified
pursuant to the requirements of N.J.A.C18:12-2.2 as Class 4C �Apartments,�
unless the real property is exempt pursuant to paragraph (4) of subsection b.
of this section.
���� The fee imposed upon the
grantor of a deed for the transfer of real property pursuant to this subsection
shall be in an amount equal to the following percentage of the entire amount of
consideration recited in the deed: [if
the consideration is in excess of $1,000,000 but not in excess of $2,000,000,
one percent;]
if the consideration is in excess of $2,000,000, but not in excess of
$2,500,000, [two] one
percent; if the consideration is in excess of $2,500,000 but not in excess of
$3,000,000, [two] one
and one-half percent; if the consideration is in excess of $3,000,000, but not
in excess of $3,500,000, [three] two�
percent; if the consideration is in excess of $3,500,000, [three] two
and one-half percent.� The fee imposed pursuant to this subsection shall be
collected by the county recording officer at the time the deed is offered for
recording and remitted to the State Treasurer not later than the 10th day of
the month following the month of collection for deposit into the General Fund.
���� b. (1) The fee imposed by
subsection a. of this section shall not apply to a deed if the grantee of the
deed for the transfer of real property is an organization determined by the
federal Internal Revenue Service to be exempt from federal income taxation
pursuant to paragraph (3) of subsection (c) of section 501 of the federal
Internal Revenue Code of 1986, 26 U.S.C. s.501.
���� (2)�� The fee imposed by
subsection a. of this section shall not apply to a deed if the transfer of real
property is incidental to a corporate merger or acquisition and the equalized
assessed value of the real property transferred is less than 20 percent of the
total value of all assets exchanged in the merger or acquisition.� A grantor
shall claim this exemption from imposition of the fee at the time the deed is
offered for recording by filing with the county recording officer such
information, in addition to the affidavit of consideration filed by one or more
of the grantor parties named in the deed or by the grantor's legal
representative pursuant to subsection d. of this section, as the Director of
the Division of Taxation in the Department of the Treasury may prescribe as to
constitute a filing of a protest of the assessment of the fee and by paying any
other recording fees not exempted pursuant to this paragraph.� This additional
information shall be forwarded by the county recording officer to the director along
with the grantor's affidavit of consideration, and shall be deemed to be and
have the effect of a protest of a finding by the director of a deficiency of
payment of the fee filed on the date on which the deed is recorded.
���� (3)�� The fee imposed by
subsection a. of this section shall not apply to a deed if the transfer of real
property is entered into on or after January 1, 2021 and is an intercompany
transfer between combined group members as part of the unitary business, as
those terms are used in section 4 of P.L.1945, c.162 (C.54:10A-4).
���� (4)�� The fee imposed by
subsection a. of this section shall not apply to a deed in the transfer of real
property that is classified pursuant to the requirements of N.J.A.C.18:12-2.2
as Class 4C �Apartments� and in which at least 10 percent of the residential
units are affordable housing units.� For the purpose of this paragraph,
�affordable housing� means housing occupied or restricted to occupancy by
households with income no greater than 80 percent of the regional median
income, including, but not limited to, housing that is deed restricted as
affordable pursuant to the �Fair Housing Act,� P.L.1985, c.222 (C.52:27D-301 et
al.).
���� c.���� The fee imposed by
subsection a. of this section shall be subject to the provisions of the State
Uniform Tax Procedure Law, R.S.54:48-1 et seq., provided, however, that
notwithstanding the provisions of subsection a. of R.S.54:49-14, a taxpayer may
file a claim under oath for refund at any time within 90 days after the payment
of any original fee and that subsection b. of R.S.54:49-14 shall not apply to
any additional fee assessed.
���� d. (1) If a transfer includes
property classified pursuant to the requirements of N.J.A.C.18:12-2.2 as Class
4 property of any type, an affidavit of consideration shall be filed by one or
more of the grantor parties named in the deed or by the grantor's legal
representative declaring the consideration and shall be annexed to and recorded
with the deed as a prerequisite for the recording of the deed. The filing of an
affidavit of consideration pursuant to this paragraph shall be in addition to
the filing, if any, pursuant to paragraph (2) of this subsection.�
���� (2)�� Whether or not the
transfer is exempt, pursuant to subsection b. of this section or any other
provision of law, from payment of the fee pursuant to subsection a. of this
section, if a transfer includes property otherwise subject to subsection a. of
this section, then an affidavit of consideration shall be filed by one or more
of the grantor parties named in the deed or by the grantor's legal
representative declaring the consideration and shall be annexed to and recorded
with the deed as a prerequisite for the recording of the deed.� The filing of
an affidavit of consideration pursuant to this paragraph shall be in addition
to the filing, if any, pursuant to paragraph (1) of this subsection.
���� (3)�� An affidavit of
consideration filed pursuant to paragraph (1) or paragraph (2) of this
subsection shall clearly and entirely state the consideration, the county and
municipality in which the property is situate, and the block and lot
description of the real property conveyed.
���� (4)�� One copy of each
affidavit of consideration filed and recorded with deeds pursuant to this
subsection shall be forwarded by the county recording officer to the Director
of the Division of Taxation in the Department of the Treasury on the 10th day
of the month following the month of the filing of the deed.
(cf: P.L.2025, c.69, s.1)
���� 2.��� Section 3 of P.L.2006,
c.33 (C.54:15C-1) is amended to read as follows:
���� 3. a. (1) (a) There is imposed
and shall be paid a tax upon the sale or transfer for consideration in excess
of [$1,000,000] $2,000,000
of a controlling interest in an entity which possesses, directly or indirectly,
a controlling interest in classified real property, which shall be paid by the
seller of the controlling interest and which shall be equal to a percent, as
set forth in subparagraph (b) of this paragraph, of the consideration paid on
the sale or transfer, provided, however, that in the case of the sale or
transfer of a controlling interest in an entity which possesses, directly or
indirectly, an interest in classified real property and an interest in other
property, real or personal, there shall be paid a tax upon the sale only if the
equalized assessed value of the classified real property exceeds [$1,000,000] $2,000,000
which shall be paid by the seller of the controlling interest and which shall
be equal to a percent, as set forth in subparagraph (b) of this paragraph, of
that percentage of the equalized assessed value of the classified real property
that is equal to the percentage of the ownership interest transferred.
���� (b)�� The tax imposed pursuant
to this paragraph shall be in an amount equal to the following percentage of
the consideration paid on the sale or transfer or the equalized assessed value
of the classified real property, as applicable:
���� (i)��� [if the
consideration or equalized assessed value, as applicable, exceeds $1,000,000,
but is not in excess of $2,000,000, one percent;] (Deleted by amendment,
P.L.���� , c.��� ) (pending before the Legislature as this bill)
���� (ii)�� if the consideration or
equalized assessed value, as applicable, exceeds $2,000,000, but is not in
excess of $2,500,000, [two] one
percent;
���� (iii) if the consideration or
equalized assessed value, as applicable, exceeds $2,500,000 but is not in
excess of $3,000,000 [two] one
and one-half percent;
���� (iv)� if the consideration or
equalized assessed value, as applicable, exceeds $3,000,000, but is not in
excess of $3,500,000, [three] two
percent; and
���� (v)�� if the consideration or
equalized assessed value, as applicable, exceeds $3,500,000, [three] two
and one-half percent.�
���� (2)�� The sale or transfer of
a controlling interest subject to taxation pursuant to paragraph (1) of this
subsection may occur in one transaction or in a series of transactions.
Transactions which occur within six months of each other are presumed, unless
shown to the contrary, to be a series of transactions constituting a single
sale or transfer.
���� Sale or transfer of a
controlling interest subject to taxation pursuant to paragraph (1) of this
subsection may be accomplished by one purchaser or may be made by a group of
purchasers acting in concert.� Purchasers who are related parties are presumed,
unless shown to the contrary, to be acting in concert.
���� b.��� On or before the last
day of the month following the month in which the sale or transfer of a
controlling interest which is subject to the tax imposed by subsection a. of
this section is completed, the seller shall file a return with the director, in
such form as the director may prescribe.� Payment of the tax shall accompany
the return.
���� c.���� The tax imposed by
subsection a. of this section shall not apply to any sale or transfer:
���� (1)�� by or to the United
States of America, this State, or any instrumentality, agency, or subdivision
thereof;
���� (2)�� to a purchaser that is
an organization determined by the federal Internal Revenue Service to be exempt
from federal income taxation pursuant to paragraph (3) of subsection (c) of
section 501 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.501;
���� (3)�� having the underlying
characteristics of the transactions enumerated in section 6 of P.L.1968, c.49
(C.46:15-10);
���� (4)�� that is subject to the
fee imposed tax pursuant to section 8 of P.L.2004, c.66 (C.46:15-7.2);
���� (5)�� that is incidental to a
corporate merger or acquisition if the equalized assessed value of the real
property transferred is less than 20 percent of the total value of all assets
exchanged in the merger or acquisition; [or]
���� (6)�� entered into on and
after January 1, 2021 if it is an intercompany transfer between combined group
members as part of the unitary business, as those terms are used in section 4
of P.L.1945, c.162 (C.54:10A-4); or
���� (7) of a controlling
interest in an entity which possesses, directly or indirectly, a controlling
interest in classified real property that is classified pursuant to the
requirements of N.J.A.C.18:12-2.2 as Class 4C �Apartments� and in which at
least 10 percent of the residential units are affordable housing units.
���� d.��� Notwithstanding the
provisions of subsection a. of this section, the transfer of a controlling
interest on or before November 15, 2025 in an entity which possesses, directly
or indirectly, an interest in classified real property shall be subject to tax
equal to one percent of the consideration over $1,000,000 if the interest was
transferred pursuant to a contract or other binding agreement that was fully
executed before July 10, 2025.
���� e. (1) The director may
require all sellers subject to a tax imposed under this section to keep such
records as the director may prescribe, and the director may require the
production of books, papers, documents, and other data to provide or secure
information pertinent to the determination of the taxes imposed by this section
and the enforcement and collection thereof.
���� (2)�� An entity with respect
to which there is a sale or transfer of a controlling interest in that entity,
shall keep a record of every transfer of a controlling interest in its stock or
in its capital, profits, or beneficial interests, as the case may be, and such
other information as the director may prescribe.� An entity shall report that
information to the director in such form and at such times as the director may
prescribe.
���� (3)�� The director may examine
the books, papers, records, and equipment of an entity with respect to which
there is a sale or transfer of a controlling interest in that entity or of a
seller liable under the provisions of this section.
���� (4)�� The director shall
collect and administer the tax imposed pursuant to this section. The director
is authorized to adopt rules and regulations to effectuate the purposes of this
section pursuant to the "Administrative Procedure Act," P.L.1968, c.410
(C.52:14B-1 et seq.).
���� (5)�� The director may extend,
for cause shown by general regulation or individual authorization, the time of
filing any return on such terms and conditions as the director may require, and
may, for cause shown, remit or waive penalties and interest as provided for in
the State Uniform Tax Procedure Law, R.S.54:48-1 et seq.
���� (6)�� The director may
delegate the director's functions hereunder to any officer or employee of the
director's division such of the director's powers as the director may deem
necessary to carry out efficiently the provisions of this section.
���� f.���� The tax imposed
pursuant to this section shall be governed by the provisions of the State
Uniform Tax Procedure Law, R.S.54:48-1 et seq.
���� g.��� As used in this section:
���� "Affordable housing"
means housing occupied or restricted to occupancy by households with income no
greater than 80 percent of the regional median income, including, but not
limited to, housing that is deed restricted as affordable pursuant to the �Fair
Housing Act,� P.L.1985, c.222 (C.52:27D-301 et al.).
���� "Classified real
property" means property that is classified pursuant to the requirements
of N.J.A.C.18:12-2.2 as Class 4A ["commercial
properties".]
�Commercial Property,� Class 4B �Industrial Property,� or Class 4C
�Apartments.�
���� "Consideration"
means the actual amount of money and the monetary value of any other thing of
value constituting the entire compensation paid or to be paid for the transfer,
including the remaining amount of any prior mortgage to which the transfer is
subject or which is to be assumed and agreed to be paid by the purchaser.
���� �Controlling interest� means,
in the case of an entity that is a corporation, more than 50 percent of the
total combined voting power of all classes of stock of that corporation, and in
the case of an entity that is a partnership, association, trust or other
organization, more than 50 percent of the beneficial ownership of classified
real property of that partnership, association, trust or other organization.
���� �Director� means the Director
of the Division of Taxation in the Department of the Treasury.
���� �Related parties� means
parties that have the relationship necessary for attribution of constructive
ownership of stock pursuant to section 318 of the federal Internal Revenue Code
of 1986, 26 U.S.C. s.318, and members of an affiliated group or a controlled
group pursuant to section 1504 or 1563 of the federal
Internal Revenue Code of 1986, 26 U.S.C. s.1504 or 1563.
(cf: P.L.2025, c.69, s.3)
���� 3. This act shall take effect
immediately and shall apply to transfers of real property or controlling
interests occurring on or after the first day of the fourth month following the
date of enactment.
STATEMENT
���� This bill eliminates the
additional fees and taxes imposed on certain transfers of real property for
consideration between $1 million and $2 million and modifies the additional
fees and taxes imposed on certain transfers of real property for consideration
in excess of $2 million.
���� Currently, an additional fee
is imposed on the seller of various categories of real property, including
residential property, commercial property, certain farm property, and
cooperative units, for consideration in excess of $1 million, as recited in the
deed.� The State also imposes a controlling interest transfer tax on certain
non-deed transfers of commercial property that are not subject to this
additional fee.� The controlling interest transfer tax is imposed on the seller
of a controlling interest in an entity that directly or indirectly owns certain
commercial property, provided that the consideration paid to acquire the
interest exceeds $1 million.
���� In both cases, the additional
fee and controlling interest transfer tax are generally imposed in an amount
based on the following percentages of the consideration received for certain
transferred properties or controlling interests:� one percent for transfers
over $1 million but not more than $2 million; two percent for transfers over $2
million but not more than $2.5 million; two and one-half percent for transfers
over $2.5 million but not more than $3 million; three percent for transfers
over $3 million but not more than $3.5 million; and three and one-half percent
for transfers over $3.5 million.
���� This bill eliminates the
additional fee or controlling interest tax imposed on the seller if the
consideration recited in the deed, or the consideration paid to acquire the
controlling interest, exceeds $1 million but does not exceed $2 million.� The
bill also modifies the tiered fee schedule used to determine the amount of the
additional fee and controlling interest tax.� Under the bill, the additional
fee and controlling interest transfer tax are to be imposed on the following
percentages of the consideration received for certain transferred properties or
controlling interests: one percent for real property transfers over $2 million
but not more than $2.5 million; one and one-half percent for real property
transfers over $2.5 million but not more than $3 million; two percent for real
property transfers over $3 million but not more than $3.5 million; and two and
one-half percent for real property transfers over $3.5 million.
���� The bill also imposes the
additional fee on certain types of commercial property, including properties
designated by regulation as Class 4B �Industrial Property� and Class 4C
�Apartments,� and imposes the controlling interest tax on the seller of a controlling
interest in an entity that directly or indirectly owns such property.� However,
the bill provides an exemption for transfers of any real property that is
classified as Class 4C �Apartments� and in which at least 10 percent of the
residential units are affordable housing units.� For the purposes of the bill,
�affordable housing� means housing occupied or restricted to occupancy by
households with income no greater than 80 percent of the regional median
income, including, but not limited to, housing that is deed restricted as
affordable under the State�s �Fair Housing Act.�
���� The provisions of the bill
apply to transfers of real property or controlling interests occurring on or
after the first day of the fourth month following the date of enactment.