NJ Mansion Tax Increase
What New Jersey’s New Mansion Tax Means for Buyers, Sellers, and the Market
Starting July 10, 2025, New Jersey is implementing a major change to how real estate transactions over $1 million are taxed — and it’s already sparking conversation across the real estate world.
What’s Changing?
New Jersey has introduced a new supplemental realty transfer fee (commonly referred to as the updated “mansion tax”). This fee is now:
Paid by the seller (previously, the 1% mansion tax was paid by the buyer)
Tiered based on the sale price, as follows:
$1M–$2M = 1%
$2M–$2.5M = 2%
$2.5M–$3M = 2.5%
$3M–$3.5M = 3%
$3.5M+ = 3.5%
This is in addition to the existing Realty Transfer Fee (RTF), which remains in place and is also paid by the seller.
Why It Matters
For Sellers:
Sellers of high-end homes will now see a substantial increase in closing costs. As you can imagine, a majority of properties on Long Beach Island will be directly affected by this. A $3.5 million property, for example, will incur approximately $149,175 in total transfer costs, a portion of the total closing costs broken down as follows (standard, non-exempt seller):
Realty Transfer Fee (RTF): $26,675
Supplemental Mansion Tax (3.5%): $122,500
Total: $149,175
This may:
Create downward pressure on pricing at the higher end
Lead to increased off-market or delayed sales
Cause sellers to reconsider listing
Encourage less price negotiations
Lead to a longer inventory crisis, which NJ is already in
For Buyers:
While buyers no longer have to factor in a 1% mansion tax, the overall structure of real estate transactions may begin to shift. With sellers now taking on a larger share of closing costs, we could see more negotiation between buyers and sellers over who covers which expenses. Sellers may also be less willing to negotiate on price, repairs, or credits, knowing they’re paying significantly more at closing. In addition, buyers may face more competition for homes priced just below key tax thresholds, like $1.99 million, as both sellers and agents look to avoid triggering a higher tax tier. Some sellers may even hold off on listing altogether, which could tighten inventory in the $1M+ market and make finding the right property even more competitive. This could seemingly pile on to the state’s already struggling inventory, and more specifically, LBI’s record low inventory we are currently experiencing.
Final Thoughts
The updated mansion tax won’t just affect luxury listings — it could ripple through the market as a whole, especially in coastal markets like Long Beach Island where $1M+ sales are common. Whether you’re buying or selling, having a clear understanding of your closing costs and negotiation strategy is more important than ever.
If you’re planning to make a move or want to talk about how this affects your property, feel free to reach out. I’m always happy to walk through your options.
