NJ mansion tax update
As part of the 2026 state budget, New Jersey has revamped its longstanding “Mansion Tax,” a supplemental realty transfer fee that applies to transactions over $1 million. These changes, signed into law by Gov. Murphy on June 30, 2025, go into effect starting July 10, 2025.
What’s New?
Seller, not buyer, now owes the fee
Previously, buyers paid a flat 1 percent tax on purchases over $1 million. That obligation now shifts entirely to sellers (grantors).Graduated tax tiers
Rather than a flat rate, the tax is now tiered by sale price:$1M to $2M → 1 percent
$2M to $2.5M → 2 percent
$2.5M to $3M → 2.5 percent
$3M to $3.5M → 3 percent
Above $3.5M → 3.5 percent
Transition relief for existing contracts
If the contract was fully signed before July 10, 2025, and the deed is recorded by November 15, 2025, sellers can apply for a refund of any tax paid above 1 percent.
Impact on Sellers
Higher closing costs: Sellers of high-end properties now face significantly increased transaction fees, potentially up to 3.5 percent on the sale price.
Reduced net proceeds: Expect deeper deductions from your bottom line.
Price negotiation squeeze: Sellers might push for higher listing prices to offset added fees or become more resistant to concessions.
Strategic timing matters: Sellers under contract before July 10 can avoid higher tax tiers and can file for refunds if they record by November 15, 2025.
What Buyers Should Know
Lower upfront costs: The 1 percent mansion tax no longer applies, easing initial expenses for buyers.
Shadow costs? Sellers may adjust pricing strategies or get tougher in negotiations to recoup their increased outlay.
A tighter luxury market: Elevated seller costs on homes above $2 million may reduce listing volume, potentially increasing competition for buyers in the $1M to $2M range.
Key Dates and Deadlines
July 10, 2025
New fee structure applies; sales contracts signed from this date are fully subject to the new regime.
By Nov 15, 2025
Sellers under contracts signed before July 10 must record the deed by this date to qualify for refunds.
Refund application
Submit within one year of deed recording using Form RTF 3.
Strategic Takeaways
Sellers: Build new tax tiers into your pricing, adjust your net proceeds expectations, and plan carefully if you're under a prior contract.
Buyers: Enjoy lower closing costs now but be ready for negotiation dynamics as sellers absorb more closing expenses.
Final Thoughts
New Jersey’s updated mansion tax reshapes the cost landscape for high-value real estate transactions. By shifting the financial burden to sellers and introducing graduated rates, the law could influence pricing, inventory, and negotiation patterns, especially in luxury neighborhoods.
Whether you're buying or selling, awareness of price thresholds and filing deadlines can save you thousands. Consult with real estate professionals and title agents to make sure every transaction navigates the new fee structure smoothly.
