How the 2024 State Budget Affects Real Estate

On June 30, the last day of fiscal year 2023, the State Senate passed the FY 2024 budget with a vote of 25-12, and the State Assembly passed it with a vote of 5127. The governor then signed the budget into law on the same day.

The total budget amounts to $54.2 billion and does not include any tax or fee increases impacting the real estate industry. Here are the key tax and fee increases we keep a close eye on during the budget proceedings:

• Realty transfer fee: First created in 1968 as a nominal fee to record deed transfers during a real estate transaction, but has increased significantly over the years.

• Tax on commissions: New Jersey Realtors® continues to strongly oppose any proposal that would extend the sales and use tax to real estate licensees’ commissions as they’re already subject to state income tax.

• Seasonal rental tax: This would make it even more expensive to traditionally rent in the Garden State and vacation locally.

While the governor did not propose any fee increases or taxes on the real estate industry when he proposed the budget in February, New Jersey Realtors® Government Affairs Department worked tirelessly and vigorously with the State Legislature to ensure the final budget did not have any added costs to the industry while supporting areas of importance, such as the New Jersey Real Estate Commission, lead paint remediation programs, and down payment assistance.

Key Funding Areas of FY State Budget 2024 New Jersey Real Estate Commission

The FY 2024 budget includes $3,680,000 in operating funds for the NJ REC. These funds ensure the governing body that regulates the real estate industry has the resources it needs to protect the public and the integrity of the real estate industry in New Jersey. In the past, the NJ REC has lacked the resources to transmit vital information to licensees and update its rules to follow any newly adopted state laws—it is the responsibility of the State Legislature to ensure the NJ REC has what it needs to continue to protect the industry.

Lead Paint Remediation Programs

In July 2022, the lead remediation law requirements went into effect. Lead paint inspection and remediation are required for residential one- and two-family rental properties upon tenant turnover or by July 24, 2024 if there is no tenant turnover. To address lead paint issues without a time of sale requirement, $3.9 million in grants are available to assist with remediation expenses. In FY 2023, more than $170 million was available for home lead remediation, and the FY 2024 budget includes $14 million for lead paint remediation programs such as the Single Family Home Lead Hazard Remediation Fund, the LeadSafe Home Renovation Pilot Program, and for other lead programs.

Down Payment Assistance

To further help families and first-time homebuyers, the FY 2024 budget also includes $40,000,000 for New Jersey’s Down Payment Assistance Program. The program, run by the New Jersey Housing and Mortgage Finance Agency, provides interest-free forgivable funds for buyers to use towards a down payment or closing costs.

Other Legislation Signed Before the Legislative Recess

Historically, prior to the State Legislature’s recess, the governor often signs multiple bills on the same day as the expected budget signing. This year was no different, with the governor signing flood disclosure and first-time buyer legislation.

Flood Disclosure Legislation

The governor signed S-3110 into law, legislation requiring sellers of real property and landlords to make certain notifications concerning flooding. Under the new law, sellers of real property and landlords must disclose their knowledge of a property’s history of flooding, flood risk, and location in a flood zone. Landlords must also notify their tenants about the availability of insurance through the National Flood Insurance Program.

The new law also requires the Department of Community Affairs to create a model notice to notify prospective buyers or renters of flood risks.

New Jersey Realtors® will monitor the state agencies and update our forms and contracts according to the regulatory process, which we anticipate could take several months.

First-Time Homebuyer Legislation

In the same week, Gov. Murphy signed S-3780 into law, legislation that provides down payment assistance for certain first-time homebuyers and creates the Resilient Home Construction Program.

The new law provides $15,000 in no-interest forgivable loans as down payment assistance for first-time homebuyers while also creating a pilot program to provide funding to rehabilitate existing homes and construct new affordable homes for sale. First-generation homebuyers would also be eligible to receive up to $10,000 in additional loans.

How You Can Help

Each year we advocate for our more than 61,000 members, homeowners, and potential buyers and sellers in New Jersey to ensure it isn’t more expensive or difficult to buy, sell, or rent a home in the Garden State while making sure Realtor® businesses are protected. To continue to support real estate and causes vital to the industry, invest in the Realtors® Political Action Committee of New Jersey and ensure federal, state, and local candidates are supported in the next election at njrealtor.com/goto/rpac.