USA – NEW JERSEY Law and Practice Contributed by: David Freylikhman, Cory Mitchell Gray, David Jensen and Jody Saltzman, Greenberg Traurig LLP
a bond equal to 110% of the lien or by payment of money into court. A mortgage lien filed prior to a statutory lien being recorded, or a lien claimant’s properly filed and served Notice of Unpaid Balance, will generally have priority over such liens, though statutory limitations apply and should be considered. In New Jersey, it is important to note that the New Jersey Prompt Payment Act provides that the contractor’s billing shall be deemed approved and certified 20 days after the owner receives it, unless the owner provides, before the end of the 20-day peri - od, a written statement of the amount withheld and the reason for withholding payment. 7.7 Requirements Before Use or Inhabitation Generally, a certificate of occupancy must be obtained before a building may be occupied following new con - struction. There are certain exceptions and rules that will otherwise govern renovations and improvements, not all of which require a certificate of occupancy. New Jersey imposes a tax on real property transfers (RTF and GPF, as applicable). The Division of Taxation has released tables showing the combined RTF (and GPF if applicable) on real property transfers, plus the fee on new construction. For consideration of not more than USD1 million, the RTF is USD6.05 for each USD500 of consideration. The RTF and GPF is paid by the seller. New Jersey also imposes a controlling interest trans - fer tax (CITT) applicable to transfers of controlling interests of corporations, partnerships, associations, trusts or other organisations that own certain clas - sified real property in New Jersey, if the equalised assessed value of the real property exceeds USD1 million. The CITT is calculated as follows: • 1% of total consideration or equalised assessed value, as the case may be, if in excess of USD1 million but not in excess of USD2 million; • 2% of total consideration or equalised assessed value, as the case may be, if in excess of USD2 million but not in excess of USD2.5 million; 8. Tax 8.1 VAT and Sales Tax
• 2.5% of total consideration or equalised assessed value, as the case may be, if in excess of USD2.5 million but not in excess of USD3 million; • 3% of total consideration or equalised assessed value, as the case may be, if in excess of USD3 million but not in excess of USD3.5 million; and • 3.5% of total consideration or equalised assessed value, as the case may be, if in excess of USD3.5 million. Federal and New Jersey corporate tax will be due on the gain from the sale of real property. The New Jersey corporate tax rates range from: • 6.5% for corporations with entire net income of USD50,000 or less; • 7.5% for corporations with entire net income of USD50,001 to USD100,000; and • 9% for corporations with entire net income of more than USD100,000. 8.2 Mitigation of Tax Liability The New Jersey Tax Court has held that no tax is due where there is no debt on the property and consid - eration stated is less than USD100. Additional miti - gation strategies may be available. Interested parties are encouraged to consult with legal counsel in New Jersey. 8.3 Municipal Taxes The RTF includes a local component. 8.4 Income Tax Withholding for Foreign Investors See 2.2 Laws Applicable to Transfer of Title regarding bulk sales law. 8.5 Tax Benefits Taxpayers may increase their basis in real estate sold to the extent that a New Jersey tax benefit was not received due to limits on depreciation and net operat - ing loss deductions in place for tax years 2002–05. For tax years beginning after 31 December 2013, income is apportioned to New Jersey based on receipts allo - cated to New Jersey. Having eliminated a property factor from the apportionment formula, owning real property in New Jersey will not increase the appor - tionment to the state.
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