Real Estate in New Jersey

Real Estate in New Jersey is a very valuable commodity.  Whether you are referring to North NJ, Central NJ or South NJ; real estate in New Jersey has a tremendous amount of value.  This is if you are interested in selling or buying.

This is from a recent article from NorthJersey.com

Trenton turns to fees to avoid risky taxes

 

By JOHN P. McALPIN
TRENTON BUREAU

 

Yury Podolsky lives on a $350 monthly check from Social Security, nearly all of which quickly gets spent on the doctors, specialists and other services needed to treat his seizure disorder and mental retardation.

If Governor Corzine's budget is approved, Podolsky will begin paying $2 a month for each of his prescription drugs, which now cost him nothing.

"It's $120 a year. It's a lot of money," said Podolsky's mother Olga, his primary caregiver. "For them [the state], a $2 co-pay is basically nothing."

Actually, Corzine budget planners are counting on the prescription co-pays to raise $13 million for the fiscal 2007 budget. The co-pays would join a lengthy list of fees, surcharges and minor taxes that serve as a mainstay supply of cash to meet government expenses and finance popular programs, like property tax rebates.

In recent years, Trenton has become more dependent on fees as revenues failed to keep pace with the soaring cost of government spending. Lawmakers and governors have dramatically increased long-standing fees and created new ones to help balance the books.

Corzine's budget follows the playbook of his recent predecessors. His $30.9 billion plan anticipates raising $17 million from a new surcharge on luxury cars and gas guzzling SUVs. The governor also is counting on another $17 million from a new fee on sales of high-end commercial properties. A new surcharge on water use also is proposed.

Critics contend that the fees have become a hidden tax to help ballooning state budgets instead of paying for the programs and services the charges are intended to support.

Social service advocates insist that the $2 co-pay would force the poor and disabled, like Podolsky, to choose between prescription drugs and food, rent or other necessities. Environmentalists argue that a proposed water tax -- about $3 a year per household -- would not be used to conserve undeveloped land. Real-estate managers say the new tax on businesses would dampen the market.

Fees and other charges are particularly attractive to lawmakers and governors because the risk of political fallout is minimal. To some longtime Trenton budget watchers, it's a convenient way to raise taxes without raising public ire.

"We basically, stealthily have taken taxes off-budget. Instead of revamping the tax system to make it more fair, we've been looking for little ways to take people's money without making it seem like they're raising taxes," said Jon Shure, head of the progressive New Jersey Policy Perspective.

Corzine, however, has taken the politically dicey step this year of proposing a 1-cent hike in the sales tax to 7 cents on every $1 in purchases, a move that hits residents every time they shop.

Fees, however, target select groups with small or one-time costs for thousands of permits, licenses and applications. And in many cases, the fees are viewed as one of the annoying, but unavoidable, facts of life. This year, boat owners will shell out $3.2 million for registrations, nurses will pay a combined $3.9 million for licenses and cosmetologists $2.6 million.

In recent years, lawmakers have taxed cellphones and added surcharges on tires. They've raised the fee for driver's licenses and car registrations. It now costs more to sell a house, start a business or file a lawsuit thanks to increased fees.

Although revenues from fees in Corzine's 2007 budget proposal are down slightly from this year, the trend has been upward for most of the past decade. Ten years ago, fees and related revenues accounted for $2.6 billion of the entire budget. Now the state is figuring on at least $3.4 billion – a 31 percent increase over the 10 years – to balance the budget for the fiscal year that begins in July.

And while the fees have gone up, some say the increased revenue rarely pays for the programs and services they were originally designed to support.

Real estate fees soar

In 1996 lawmakers agreed to raise court fees to help fund a program providing legal services for poor residents. The program was in desperate straits: its federal funding had been slashed and the higher court fee kept the program operating.

The fee was doubled in 2003, but this time the state budget was the beneficiary. The program, Legal Services of New Jersey, has made do with the same amount of money it's been getting since 1996.

"All of the other filing-fee increases have not gone for legal services," said Melville Miller, president of Legal Services of New Jersey.

Divorced couples probably aren't aware that they, too, have been helping the state budget. Four years ago, it cost $50 to file for divorce in New Jersey. Half of that money, $25, was dedicated by law to pay for shelters and services for abused women.

A year later, lawmakers boosted the divorce fee to $250 and eagerly sent the extra $200 back into the budget as they fought to save property tax rebates from the chopping block. The share set aside for shelters remained the same.

Home sellers pay far more than they did just three years ago thanks to a series of increases in the real estate transfer fee, a charge once used simply to pay the cost of tracking and recording property transactions.

In 2003, the fee was $2,563 on homes sold at $557,519, the average sale price in Bergen County that year. Corzine's proposed hike would boost that fee -- based on the same sale price -- to $4,735, an 85 percent increase.

"This was to help pay for the cost of tracking and buying real estate. What it's turned into is a windfall for the state," said Jared Grasso, executive director of the New Jersey Association of Realtors.

Lawmakers also have added a "McMansion" tax: a 1 percent surcharge on houses that sell for more than $1 million.

Real estate agent Mary Lenk of Cresskill said she sold a house in Bergen County this month where the owner's luxury home fee was $320,000.

"I made sure I told the homeowner there was a transfer fee," Lenk said. "She nodded her head and was very happy I told her. And then her son said, 'We don't have that in Florida.' They took it as matter of course that we have that here in New Jersey."

The higher fees eat away at an investment or "a retiree's nest egg," Grasso said. And in some cases, people are listing homes just below the $1 million mark to avoid the luxury tax, he said.

"What you're seeing is those houses on the cusp of a million, the market has been stifled by those taxes," Grasso said. "They've actually put a chokehold on that higher-end market."

Corzine has proposed adding that same luxury fee on business properties that sell for more than $1 million, a move that could bring the state $17 million. Adding another fee on businesses looking to move here will drive them to New York or Pennsylvania, Grasso said.

"All of the other nickel-and-dime taxes and fees that have been placed upon the people of New Jersey and everything adds up. You're pricing people out of New Jersey," he said.

Working poor hit hardest

Governors and legislators over the years have sold their fee increases, surcharges and assessments by arguing that the money would pay for needed services.

Former Gov. James E. McGreevey said his plan to add $1 to monthly cellphone bills would build communications towers to help emergency services. A $1.50 surcharge on new tire purchases would pay to clean up stockpiles of old tires.

But there is no guarantee that fee revenue is ever used for those purposes. Without a constitutional amendment dedicating the money for a specific use, state officials can spend the money however they see fit. Voters have approved measures dedicating gas tax revenues for transportation projects and income tax for property tax relief. A tire surcharge can be used for just about anything.

While many of the fees seem small, they hurt the working poor the most, activists said.

In 2000, it cost $48.50 to register a car. Now that fee is $56 and lawmakers recently approved adding a $3 charge to help buy helicopters for the state police. Cash-strapped lawmakers approved a plan in 2004 requiring car buyers to pay four years' worth of vehicle registration upfront -- a total of $224.

Such increases put pressure on those with fixed incomes and others in a state with one of the highest costs of living in the nation, activists say.

"It could take literally months for someone of the lower-middle class to be able to get to a place where they could be able to afford all of these things," said Lowell Ayre, executive director of the Alliance for the Betterment of People with Disabilities.

Adding a co-pay on desperately needed medical services like prescription drugs only adds to the hardship, he said.

"Somebody who gets Social Security Insurance Supplemental of $500 a month, when they have to pay for their food, clothing and shelter, and they have $10 worth of co-pays in that month -- which is not unreasonable -- is too much money. Even $10 for somebody who only has $500 a month is a lot of money," Ayre said.

"If they're trying to get affordable housing and they're supposed to feed themselves, then putting the co-pay in, they will truly have to make a decision whether they want to eat or whether they want to get their drugs."

Tip #23

Home Buying Tip, Big Ticket Items:
Before you buy a home you should avoid buying any big ticket items.  When this is found out during the credit process or reporting it can make mortgage banks nervous.

Even if you will be able to get a loan, you might not be able to get the best available interest rate.

 

Tip #24

Home Selling Tip, Listing Right:
A common mistake when people list their house (especially in a buyers’ market) is list the house at a high price that they don’t anticipate to sell it at.  They figure that if they get it then GREAT but if not they can always lower the price.

This is not a good practice because what mostly happens is it will stay on the market for a while and make potential home buyers nervous because it’s been on the market so long.