The New Jersey state legislature is currently considering two bills in the fiscal year 2019 budgets that could greatly impact the state’s housing market and destination communities. New Jersey Realtors, the trade association representing more than 52,000 members, strongly opposes both bills and has expressed concerns that these changes could have detrimental effects to New Jersey’s economy, tourism industry, and real estate market.
Bill A-4295/S-2813 proposes raising the realty transfer fee by one percent on homes being sold over $1 million in the state of New Jersey.
“The high-end market is still struggling despite general improvements in New Jersey’s housing market over the past couple of years,” said New Jersey Realtors President Christian Schlueter. “We cannot afford to pile on more costs on potential homeowners in a state that already has some of the highest property taxes and living expenses.”
The proposed one percent fee on homes being sold for over $1 million equates to a minimum $10,000 tax increase when a home is sold – possibly more, depending on the sale price of the home. Combined with the new federal tax law changes enacted last year, this proposal would be another financial hit to homeowners buying or selling a home in the Garden State.
“In high property tax areas like Bergen County, where we currently have over 1,100 homes on the market for over $1 million, any increase to the realty transfer fee would be detrimental to our market,” said Charlie Oppler, CEO of Prominent Properties Sotheby’s International Realty in Northern New Jersey. “It could also lead to a decrease in home sales and values because sellers could reduce the price of their homes so this tax would not be applied. In turn, there would be less revenue collected through the existing realty transfer fee.”
Also up for consideration is bill A-4294/S-2814, which proposes a seasonal sales tax on short-term vacation rental properties. For communities that rely on tourism, an additional tax on rental homes could drive tourists to other neighboring states that are more affordable.
“This new tax will have devastating effects on tourism in New Jersey. At a time when homeowners are still recovering from the devastation of Superstorm Sandy, we cannot afford to pile on more financial hurdles on homes being rented or sold in this vulnerable environment,” said CEO of New Jersey Realtors Jarrod Grasso.
According to a 2015 study from Tourism Economics, an Oxford Economics Company, a visitor spends an average $1,000 per week on transportation, food, shopping and entertainment, which could amount to an approximate loss of $100 million in economic activity if a seasonal rental tax was enacted. New Jersey could also lose nearly 1,000 jobs and face an immediate loss of 20 million in tax revenue.
“This new tax will dramatically impact tourism in New Jersey, one of our most profitable industries, which we cannot afford to do,” Grasso added.
The state legislature has until June 30 to vote on these bills and approve the budget or Gov. Murphy could order a state government shutdown.
New Jersey Realtors, the voice of real estate for New Jersey for 100 years, is a non-profit organization serving the professional needs of more than 52,000 Realtor and Realtor-Associate members engaged in all facets of the real estate business. In addition to serving the professional needs of its members, NJ Realtors is dedicated to enhancing the ability of its members to conduct their business successfully while maintaining the preservation of private property rights. Realtor is a registered collective membership mark, which may be used only by real estate professionals who subscribe to the Realtor organization’s strict Code of Ethics and are members of the national, state and local Realtor organizations. For more information, visit njrealtor.com.
This article is sponsored material from NJ Realtors.