What You Need to Know About the New Jersey Mansion Tax Changes
New Jersey recently passed significant changes to its long-standing “mansion tax” law—and if you’re buying or selling property above the $1 million mark, these changes could directly impact your bottom line.
Let’s break down what changed, what it means for buyers and sellers, and what you need to consider moving forward.
A Quick Refresher: What Was the Mansion Tax?
The mansion tax in New Jersey has been around for years and previously applied a 1% tax on the full purchase price of any property sold for over $1 million. This tax was traditionally paid by the buyer at closing—essentially an added cost on top of down payments, closing costs, and everything else tied to homeownership.
What’s Changing?
As part of Senate Bill No. 4666, going into full effect on July 10, 2025, the tax structure is being completely overhauled. Here’s what’s new:
1. The Seller Now Pays
The biggest shift is who pays. Instead of buyers footing the bill, the responsibility has now moved to sellers.
2. A Tiered Tax System
Instead of a flat 1% across the board, the mansion tax is now based on a graduated scale:
$1M to $2M: 1%
$2M to $2.5M: 2%
$2.5M to $3M: 2.5%
$3M to $3.5M: 3%
Over $3.5M: 3.5% flat rate
Important: These percentages apply to the entire sale price, not just the amount above each threshold.
What Properties Are Affected?
The tax applies to:
Residential homes
Commercial properties
Farmland with residential dwellings
Cooperative units (co-ops)
Properties sold for less than $1 million remain exempt.
Why the Change?
This restructuring by the state’s makes homeownership more affordable—especially in a market where even modest homes now cross the million-dollar threshold. By shifting the tax burden to the seller, the state hopes to ease some of the up-front costs for buyers.
What Does This Mean for Sellers?
This change is likely to reduce net proceeds, especially for longtime owners whose homes have appreciated significantly. Sellers will need to factor the tax into their pricing strategy and work closely with real estate professionals, attorneys, and title companies to plan for the new financial impact.
In some cases, sellers may attempt to raise prices to compensate, but because the tax is percentage-based, it may be hard to fully offset.
What Does This Mean for Buyers?
If you’re buying a home over $1 million, this is good news. One of the larger up-front expenses has been eliminated, which could make luxury or high-end homes more accessible. This could also affect negotiation leverage—especially as sellers adjust their expectations in response.
Timing Matters
Contracts fully executed before July 10, 2025, with recorded deeds by November 15, 2025, may qualify for partial refunds on the difference between the old and new tax structures. If you’re in a pending or pre-contract phase, now is the time to explore timing strategies.
In Summary:
The buyer is no longer responsible for the mansion tax—the seller is.
The tax is now tiered, ranging from 1% to 3.5%, based on the total sale price.
The change affects high-end residential, commercial, and cooperative real estate.
Effective Date: July 10, 2025.
Final Thoughts
As a New Jersey real estate advisor and lifelong New Jersey resident, I’m watching these changes closely. They’ll impact how we price, negotiate, and structure deals—especially in places like Hudson, Bergen, and Essex counties where million-dollar homes are increasingly common.
If you’re thinking of buying or selling in the next 12–18 months, now’s the time to reassess your strategy. Let’s talk through the numbers and timing to ensure you're prepared.
DM me or email tom@tomworleyhomes.com to schedule a no-pressure consultation.
