Property taxes

Taxable value

How is the value of property assessed for tax purposes in your state? Which types of property are subject to tax?

Real property

All real property in New Jersey, unless expressly exempted or excluded, is subject to tax. Real property means all land and improvements thereon and includes personal property affixed to the real property (N.J. Stat. Ann. § 54:4-1).

The taxable value of real property is equal to the true value of such property multiplied by a percentage of true value, as established at the county level by the County Boards of Taxation (N.J. Stat. Ann. § 54:4‑2.25).

Personal property

Taxable personal property includes only:

  • machinery, apparatus, or equipment used in refining petroleum; and
  • tangible goods and chattels, exclusive of inventories, used in the business of local exchange telephone, telegraph, and messenger systems (N.J. Stat. Ann. § 54:4-1).

All other personal property is not subject to tax.

The taxable value of personal property is equal to its true value (N.J. Stat. Ann. § 54:4-2.44). The true value of personal property is presumed to equal its original cost less depreciation, although this cannot be less than 20% of the original cost as long as the property remains in or is held for use (N.J. Stat. Ann. § 54:4‑2.45).

Intangible property

Intangible property is not subject to tax.

State rate

What is the state property tax rate?

Generally, property tax rates are set at the local, rather than state, level.

Local rates

What is the range of local property tax rates levied in your state?

Local tax rates vary year to year, depending on local government budget needs. In 2017 local effective tax rates (i.e., assuming all property was taxed at 100% of its true value) ranged from 0.5% to 19.2%. Local tax rates are available on the New Jersey Division of Taxation’s website.

Exemptions and deductions

What exemptions and deductions are available?

Several types of property are exempt from New Jersey’s property tax, including:

  • property used for educational, religious, or charitable purposes (N.J. Stat. Ann. § 54:4-3.6);
  • government property used for public purposes (N.J. Stat. Ann. § 54:4‑3.3);
  • certain hospitals (N.J. Stat. Ann. § 30:9‑23.24);
  • certified historic sites owned by non-profit corporations (N.J. Stat. Ann. § 54:4‑3.52); and
  • renewable energy systems (N.J. Stat. Ann. § 54:4‑3.113b).

Filing requirements

What filing requirements and procedures apply?

Real property

There are no filing requirements. However, an owner of real property must, on written request from a local taxing district, provide a full and true account of their name, real property, and income derived therefrom, if applicable (N.J. Stat. Ann. § 54:4‑34). Property taxes are collected by local tax collectors and are payable in four instalments throughout the year (N.J. Stat. Ann. §§ 54:4-64, 54:4‑66).

Tangible personal property

On or before September 1 of each year, any person owning tangible personal property subject to property tax must file a return with the assessor of the taxing district in which such property is located (N.J. Stat. Ann. § 54:4‑2.48).

Real estate transfer tax

How is the transfer of real estate taxed in your state (including tax base, rates, exemptions, and filing formalities)?

Tax base

A realty transfer fee is imposed upon the recording of deeds evidencing transfers of title to real property located in New Jersey. The fee must be paid upon the recording of deeds conveying title to real property in New Jersey. It is calculated based on the amount of consideration recited in the deed (N.J. Stat. Ann. § 46:15-5 and following).

Rates

The rate at which the transfer tax is imposed on a standard transaction, where the total consideration is not in excess of $350,000, is as follows:

  • $2.00 per $500 of the consideration not in excess of $150,000;
  • $3.35 per $500 of the consideration in excess of $150,000 but not in excess of $200,000;
  • $3.90 per $500 of the consideration in excess of $200,000 but not in excess of $350,000.

The rate at which the transfer tax is imposed on a standard transaction where the total consideration is in excess of $350,000 is as follows:

  • $2.90 per $500 of the consideration not in excess of $150,000;
  • $4.25 per $500 of the consideration in excess of $150,000 but not in excess of $200,000;
  • $4.80 per $500 of the consideration in excess of $200,000 but not in excess of $550,000;
  • $5.30 per $500 of the consideration in excess of $550,000 but not in excess of $850,000;
  • $5.80 per $500 of the consideration in excess of $850,000 but not in excess of $1 million;
  • $6.05 per $500 of the consideration in excess of $1 million.

See the New Jersey Division of Taxation’s NJ Realty Transfer Fees (last updated June 5, 2018).

An additional 1% fee is imposed on buyers in transfers for consideration in excess of $1,000,000 of:

  • Class 4A "commercial” property;
  • Class 2 "residential" property;
  • Class 3A "farm” property (if it includes a building or structure intended or suited for residential use transferred to the same grantee with the farm property); and
  • cooperative units (N.J. Stat. Ann. § 46:15-7.2).

Exemptions

A list of partial exemptions can be found in N.J. Stat. Ann. § 46:15-10.1. A list of total exemptions can be found in N.J. Stat. Ann. § 46:15-10.

Filing formalities

The filing procedures for a particular county may be obtained from the county clerk’s office.

Controlling interest transfers

New Jersey also imposes a tax on the transfer of a controlling interest in an entity that owns commercial property. The transfer tax is only imposed on the sale or transfer, for a consideration in excess of $1 million, of a controlling interest (i.e., more than 50%) in an entity which directly or indirectly possesses a controlling interest in certain commercial property (N.J. Stat. Ann. § 54:15C‑1). Transactions that take place within six months of one another are presumed to constitute a single sale or transfer and are aggregated (N.J. Stat. Ann. § 54:15C-1(a)(2)).

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