Thank you Governor McGreevey ... again.
Hizzoner passed the New Jersey real estate millionaire's mansion tax in 2004, imposing a transfer tax on the New Jersey home buyer for the first time.
In the good old days a real estate agent could figure the sales tax on New Jersey (called the realty transfer fee) with a calculator.
Now we need a Cray supercomputer.
Governor Corzine followed McGreevey's lead and continued increasing the realty transfer tax to fill the Garden state coffers. The New Jersey Association of Realtors led a spirited campaign against the mansion tax but failed to wean Trenton off it's tax-and-spend teat.
Sellers (now millionaire buyers) pay the tax at closing.
What's happening in New Jersey? The rich are leaving. They're leaving in droves. New Jersey has lost over $70 billion dollars of wealth between 2004 and 2008. How does one quantify $70 billion?
It is the Gross Domestic Product of Vietnam. New Jersey is losing a nation's worth of wealth. Other states are aggressively recruiting our best and brightest.
Such a financial and professional drain of resources accelerates a whirlpool effect that does not disadvantage the wealthy (for they have already packed their Gucci bags and purchased their $5 million residence on the World Cruise) but adversely impacts the lower and middle class.
People who actually build stuff with their hands!
What use are the wealthy to a society other than suck the life-blood of the working man? Easy with the Socialist mantra coming from Washington D.C.
"Trickle-down" isn't so much a class warfare rallying cry as it is plain old common sense (Will Rogers coined the phrase during the Great Depression):
- The wealthy re-invest their earnings, typically in local projects where they can manage and grow their investments.
- They build bigger houses and so employ the construction trade. Re-assessment results in higher property taxes on the renovations, which in turn fuels education (not to mention the additional permit fees paid to the town and county). Close to 85% of local property taxes in Monmouth County go towards Education.
- When spurred by a business-friendly climate, the rich expand their local businesses and so create jobs.
- When a nation over-burdens its citizens with onerous taxes the government actually stimulates overseas investment instead of domestic re-investment.
I do know one niche that bucks the trend, that benefits from across-the-board increases in New Jersey taxes.
Moving companies are doing a booming business by packing up our New Jersey rich folk and taking them to Pennsylvania, the Carolina's, Texas and Florida. New Jersey doesn't just tax real estate and income; there's a hefty estate tax waiting for the affluent resident lucky enough to die here.
If you purchased a million dollar home in New Jersey what's the additional tax waiting for you at the closing table?
1% of the purchase price equal to or greater than $1,000,000.
So the purchaser of a $1,100,000 executive home in Holmdel, New Jersey, for example, can expect to pay an additional $11,000 in realty transfer tax. What if the home costs $990,000? No mansion tax.
You see the game within a game here.
Keep your purchase under one million dollars if you're shopping for a luxury New Jersey home. We have a new Governor now, Chris Christie. Let's see if the new Hizzoner can bring fiscal responsibility to Trenton and all residents of New Jersey.
- Would you like to purchase a million dollar plus Holmdel New Jersey home for sale? Click HERE to preview the complete inventory of luxury homes. Get ready to sign another check payable to "The State of New Jersey Treasurer."
- You want to keep your new home search in Holmdel New Jersey under $1 million and avoid any unnecessary taxation? Click HERE then.
Call Andrew today at (732) 580-0822 or E-MAIL ANDREW
Andrew J. Lenza, ABR GRI MBA Broker Sales Associate
Branch Vice President
Coldwell Banker Residential Brokerage, 864 Highway 35
Middletown, New Jersey 07748
Office (732) 671-1000