This is a major change for buyers and sellers in New Jersey- particularly in the seashore market:
| Update on the Realty Transfer Fee Fight New Jersey REALTORS® is leading the fight to protect homeowners and the real estate market from proposed legislation that would have significantly increased taxes on real estate transactions. While we do not support any increase in taxes on real estate, the revised version of the law that will likely be passed is a vast improvement from the original proposal—thanks to the aggressive and strategic advocacy efforts led by our Government Affairs team. Our Call for Action is still ongoing—please take action here if you have not yet. What’s Changing If passed, effective July 10, 2025, a new graduated tax on high-end property sales will go into effect. This tax, known as the “Supplemental Fee to the Realty Transfer Fee” is separate from the existing Realty Transfer Fee. Here’s the breakdown of the new tax, which would now be entirely paid by the seller, on amounts in excess of:$1 million: The existing 1% “mansion tax” remains, but the responsibility shifts from the buyer to the seller, amending the 2004 law.$2 million: 2% tax on the seller.$2.5 million: 2.5% tax on the seller.$3 million: 3% tax on the seller.$3.5 million and above: 3.5% tax on the seller. In the Last 48 Hours Negotiations around this proposal vacillated wildly in the past 48 hours, with suggested tax rates climbing as high as 5%. NJ REALTORS® was fully engaged throughout this rapid and uncertain period, pushing back on excessive increases and advocating for a more measured, equitable structure that would not unfairly burden the existing market. Our efforts directly helped shape a final version that, while still concerning, is far more reasonable than what was initially on the table. Effective Timeline The new rates will go into effect July 10, 2025 and will apply to all contracts executed on and after July 10, 2025. If there is a fully executed contract in place before July 10, 2025 and the deed is recorded before Nov. 15, 2025, the state may issue a refund for the additional tax charged under the new law. This ensures fairness for deals that may be caught in transition. A graduated structure lessens the blow for most transactions and narrows the impact.There is no rate increase between $1 million and $2 million—only a shift in responsibility from the buyer to seller. Through our lobbying efforts, more than 98% of all real estate transactions in New Jersey are exempt from this new proposed law. To be clear: We do not support any increase in real estate taxes and have actively rallied against the increase since the proposal was announced in the governor’s proposed budget in February. However, we are proud our advocacy delivered critical improvements to what was once a potentially devastating proposal. |
Summary of the Mansion Tax Changes
I participated in the New Jersey Association of Realtors briefing this morning to better understand the changes that will go into effect as of July 10, 2025.
Key points as of 7/1/25-
1) Realty transfer tax fees remain the same- no increase in the fee structure. This tax continues to be a seller expense of approximately 1%, and is discounted for primary home owners over 62 years of age.
2) Mansion Tax (also called the supplemental tax) becomes a seller expense as of July 10, 2025. No discounts for seniors or primary homes.
3) The mansion tax continues to apply to residential, multi-family and some commercial properties- no changes on qualifying properties. Vacant land remains exempt.
4) As of July 10th, the Contract of Sale available in NJAR Forms will be updated with the new law. There will also be an addendum available to address contracts already in place.
5) Buyers continue to pay the mansion tax on any settlement prior to July 10th.
6) Sellers will pay the mansion tax on any settlement from July 10th or later.
7) If there is a fully signed and binding sale contract (out of attorney review) as of July 9th, with settlement scheduled for after July 10th, but prior to November 15th, the seller may qualify for a rebate of the mansion tax paid in excess of the original 1%.
8) If the sale price is $1,000,001 to $2,000,000, the seller pays 1%, and does not qualify for a rebate. If the sale price is $2,000,001, the seller pays 2% mansion tax and qualifies for a rebate of the extra 1%. The rebate only applies to the mansion tax paid in excess of 1%, therefore, the max rebate for sales $3,500,001 and above will be 2.5%. Sellers will apply for this rebate with the NJ Division of Taxation. For all sale contracts signed on July 10th or later, there’s no rebate option.
9) Note that the mansion tax applies to sale prices OVER the stated amounts:
Over $1,000,000 = 1%
Over $2,000,000 but not greater than $2,500,000 = 2%
Over $2,500,000 but not greater than $3,000,000 = 2.5%
Over $3,000,000 but not greater than $3,500,000 = 3%
All sales over $3,500,000 = 3.5%
I’m happy to answer questions to the best of my ability.