USA – NEW JERSEY Law and Practice Contributed by: David Freylikhman, Cory Mitchell Gray, David Jensen and Jody Saltzman, Greenberg Traurig LLP
7.7 Requirements Before Use or Inhabitation
• 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. Effective 1 January 2021, a transfer of real prop - erty that is an intercompany transfer between combined group members as part of the unitary business is exempt from the transfer tax (New Jersey Statutes Section 46:15-10 (r)). 8.2 Mitigation of Tax Liability A deed or controlling interest transfer is only subject to tax if consideration exceeds USD100. The New Jersey Tax Court held that no tax is due where there is no debt on the property and consideration stated is less than USD100. 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 operating 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 allocated to New Jersey. Having eliminated a property factor from the apportionment formula, owning real property in New Jersey will not increase the apportion - ment to the state.
Generally, a certificate of occupancy must be obtained before a building may be occupied following new construction. There are certain exceptions and rules that will otherwise govern renovations and improvements, not all of which require a certificate of occupancy.
8. Tax 8.1 VAT and Sales Tax
New Jersey imposes a tax on real property trans - fers (RTF). The Division of Taxation has released tables showing the combined RTF on real prop - erty transfers, plus the fee on new construction. For consideration of not more than USD1 million, the RTF is USD6.05 for each USD500 of consid - eration. The RTF is paid by the seller. New Jersey also imposes a 1% controlling inter - est transfer tax applicable to transfers of con - trolling interests of corporations, partnerships, associations, trusts or other organisations that own certain classified real property in New Jer - sey. The tax is 1% of the consideration paid for the transfer of the controlling interest in an entity that possesses a controlling interest in commer - cial properties, if the equalised assessed value of the real property exceeds USD1 million. If the entity possesses commercial and other property, the tax is 1% of that percentage of the equal - ised assessed value of the commercial property that is equal to the percentage of the ownership interest transferred. 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:
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