We are in the process of a mortgage refi for our primayr residence in NJ. In order to save 1/8th on the rate, we need to move it out of the "revocable" trust we set up for estate planning. However, the title attorney is saying we may be required to pay a transfer tax and posisble a mansion tax since the house is worth over $1MM. The mortgage banker says otherwise as it is not a sale.

Any help would be appreciated.

If you transfer property from one person/entity to another person/entity it is considered a sale. However you may be able to avoid the transfer and mansion taxes if the consideration (purchase price) is less than $100. This is common in situations where transfers take place between family members. Ask the title attorney if you can do a transfer for less than $100 in this case.

What do you think of the following from NJ: A transfer of realty to a grantee in trust to hold the property for the exclusive use and benefit of the grantor as beneficial owner. From http://www.state.nj.us/treasury/taxa...gs/reg1816.pdf

IA transfer of realty to a grantee in trust to hold the property for the exclusive use and benefit of the grantor is not subject to a realty transfer fee, since the rights of ownership are still completely enjoyed by the grantor as beneficial owner.

But a similar concept.

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That applies only if you are transferring to a trust, not from a trust.

Sure it's similar. But I don't think that similar is good enough to avoid the transfer fee and mansion tax. Check with the title attorney to see if you can do it for a consideration of less than $100.

Oh, and, in the future, please use the Answer box rather than the Comment box.

Thanks for your input Lisa.

My pleasure. Good luck!

I would believe the title attorney - that moving it out of trust is effectively changing owners on the deed as far as NJ is concerned.
I would consult a tax attorney or NJ Revenue.

Oops I missed ALL the responses