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December 3, 2007 02:48:12
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Will JC home sellers face new fee?
Realtors fight proposal for local realty transfer tax
The ad was recently seen in various newspapers across the state with the phrase, "Don't let the politicians crack you nest egg."
Under a photo of a smashed eggshell, the words said, "Your home is your nest egg. But some Jersey City politicians want to crack it."
The ad was referring to a proposed "home sales tax" that would force home sellers to pay an extra fee to the city when a property deed is transferred. Such a fee already exists on the state level, but Jersey City Mayor Jerramiah Healy wants to have a separate local fee to go to Jersey City.
But the Liberty Board of Realtors (formerly the Hudson County Board of Realtors), who paid for the ads, say that the tax would force homeowners to pay hundreds of dollars more upon sale of their homes, thus creating additional hardship in an already slumping home sales market.
The Realty Transfer Fee is actually imposed when the deed for the transfer of title is recorded.
The Liberty Board wants to stop legislation that was first proposed by Healy last year to state legislators. In the proposal, cities such as Jersey City and Newark could impose a local realty transfer fee of 50 cents for every $500 of sales when property is transferred from buyer to seller.
That's in addition to the realty transfer fee imposed by the state. The state fee starts at $2 per every $500 for houses under $150,000, and rises to $6.05 per every $500 for a $1 million sale. It can sometimes reach $12,000 and higher.
Right now, the legislation is still pending in the state legislature, and there is speculation it will be introduced in the new year.
But the Liberty Board isn't waiting for the legislation to be introduced.
They have not only unveiled the ad attacking the proposal, but also are part of the New Jersey Association of Realtors' effort to create a website on the matter (www.njhometax.com).
Mayor Healy in a recent interview said he is still supporting his proposal and believes it will be passed.
Healy said the reason he is seeking the legislation is because the city does receive any revenues from the state's transfer fee.
Fighting for the fee
Last week, Healy said, "Here's what occurs on say, a $100,000 sale. There's a $500 fee, and ... Trenton takes $400 of that money and sends $100 of that money back to the county."
Healy continued, "What does the city get out of that? Absolutely nothing. Meanwhile, we are doing all the background work with the tax searches and other searches for this closing to happen."
Healy said the city just wants a $100 share for every $100,000 of property. He said this would bring $1 to $2 million in revenues into the city's coffers.
He also said he had seen the ad. He said it is "foolish and inaccurate."
"You know that on a $100,000 sale I was talking about, what fails to be mentioned is that the Realtor gets $6,000 from a closing," Healy said. "I just want a measly 1/10 of 1 percent, yet these people are saying on TV, criticizing Jersey City politicians for imposing a tax, and it's not a tax."
He said this new realty transfer fee for Jersey City and Newark would actually be a "benefit" in that the revenue going to the city would ease the tax burden on homeowners.
'Horrible'
Joseph Hottendorf, executive director of the Liberty Board of Realtors, said recently that Healy's legislation is a "horrible, horrible proposal" that stands a good chance of failing in the State Legislature.
"We have been talking to politicians here in Hudson County and throughout the state, and we are gaining support, as this tax will do more harm than good," Hottendorf said. "I hope legislators change their mind and see that this will have a negative impact on home sales."
Longtime Jersey City realtor Albert Cupo said that Healy's proposal was not popular with local realtors, but they understood what he is trying to achieve.
"Last thing we want is to make Mayor Healy look bad, but this was not an initiative that was well-thought out," Cupo said.
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