What is the maximum redemption rate?

What is the maximum redemption rate?

• A. 12%
• B. 18%
• C. 24%
• D. 30%

Answer: (B)

The amount you can charge for redeeming a tax sale certificate is governed by a fixed legal cap. In New Jersey, that cap is 18 percent per year. So the maximum redemption rate is 18% annually, not 12%, 24%, or 30%. In practice, that means the holder of the tax sale certificate is entitled to up to 18% annual interest on the amount due from the date of sale to the date of redemption. Since 18% per year translates to about 1.5% per month, you can estimate the interest portion by multiplying the principal by 1.5% for each month elapsed, before adding any applicable costs. For example, redeeming after six months would generate roughly 9% in interest on the certificate amount, plus the principal and any approved costs.

The amount you can charge for redeeming a tax sale certificate is governed by a fixed legal cap. In New Jersey, that cap is 18 percent per year. So the maximum redemption rate is 18% annually, not 12%, 24%, or 30%.

In practice, that means the holder of the tax sale certificate is entitled to up to 18% annual interest on the amount due from the date of sale to the date of redemption. Since 18% per year translates to about 1.5% per month, you can estimate the interest portion by multiplying the principal by 1.5% for each month elapsed, before adding any applicable costs. For example, redeeming after six months would generate roughly 9% in interest on the certificate amount, plus the principal and any approved costs.