On June 30, 2025, Governor Phil Murphy signed New Jersey’s FY 2026 budget into law. A major part of this new legislation is a significant change to the mansion tax structure—shifting the tax burden from buyers to sellers and introducing new tiered fees for high-end real estate transactions.
Key Changes to the Mansion Tax in New Jersey
Previously, a 1% mansion tax applied to properties sold for more than $1 million, and it was the buyer’s responsibility. Under the new rules, the seller is now responsible for this tax, and additional tiers have been added for more expensive properties.
| Sale Price | New Fee (Paid by Seller) | Fee Change |
|---|---|---|
| $1,000,000 – $2,000,000 | 1% | Shifted from buyer to seller |
| $2,000,000 – $2,500,000 | 2% | Increased by 1% |
| $2,500,000 – $3,000,000 | 2.5% | Increased by 1.5% |
| $3,000,000 – $3,500,000 | 3% | Increased by 2% |
| $3,500,000 and above | 3.5% | Increased by 2.5% |
Effective for all closings on or after June 30, 2025.
In addition to this new "mansion tax" structure, sellers are still responsible for the standard New Jersey Realty Transfer Fee, which is calculated based on the total sales price using a sliding scale. This ordinary fee starts at approximately $2-4 per $500 of sale value and increases in tiers as the price goes up. It applies to all residential property sales and is separate from the new supplemental fee described above. Also, for non-resident sellers, New Jersey requires a minimum 2% tax withholding at closing, which is treated as a prepayment toward potential state income taxes owed. These layers of taxation make it essential to calculate net proceeds carefully and plan ahead.
What This Means for Home Sellers
If you're planning to sell a high-value home in areas like Avalon, Margate, Cape May, or Ocean City, these changes directly impact your net proceeds. For example, selling a $4 million home now includes a $140,000 supplemental fee due at closing—paid by, the seller.
Next Steps
- Plan Ahead: Work with your agent to build these costs into your pricing strategy.
- Reassess Net Proceeds: Be prepared to calculate your true net with the new tax included.
- Get Expert Guidance: Reach out for a detailed review of how this affects your specific situation.
As always, selling luxury real estate requires strategy, foresight, and up-to-date knowledge. If you’re thinking of selling your home, I’m here to walk you through every step and make sure you stay ahead of the curve.
