Selling property in New Jersey has never been simple—but after July 10, 2025, it became more costly for many high-end transactions. The state’s long-standing “mansion tax,” once a flat 1% paid by buyers, shifted to sellers and became tiered.
If you’re considering selling property valued above $1 million, these new rules may directly influence the financial outcome of your transaction.
The right planning may help you navigate the change and better prepare for its impact.
From a 1% Flat Tax to a Tiered “Graduated Percent Fee”
Before July 2025: New Jersey imposed a flat 1% “mansion tax” on the entire sale price of properties over $1 million. This surcharge, introduced in 2004, was paid by the buyer at closing, on top of the standard Realty Transfer Fee (RTF), a state-imposed charge on most property transfers, paid by the seller.
After July 10, 2025: Sales above $1 million are now subject to a Graduated Percent Fee (tiered tax) paid by the seller.
The new tiers:
- $1,000,000.01 – $2,000,000.00 → 1%
- $2,000,000.01 – $2,500,000.00 → 2%
- $2,500,000.01 – $3,000,000.00 → 2.5%
- $3,000,000.01 – $3,500,000.00 → 3%
- $3,500,000.01 and above → 3.5%
These percentages apply to the entire sale price, not just the portion above each threshold.
📌 Example:
- $2,000,000 sale → 1% = $20,000 (seller-paid).
- $2,020,000 sale → 2% = $40,400 (seller-paid).
That $20k price difference may double the tax, illustrating why sellers should be mindful of “cliff” effects at each tier. At the high end, a $4M sale now generates a $140,000 fee (3.5%)—versus just $40,000 under the old system.
👉 Important: The Graduated Percent Fee is in addition to the standard RTF. The RTF (about 0.4%–1%, depending on price) remains in place and is still paid by sellers.
Tax Burden Shifts from Buyer to Seller
Previously, buyers paid the mansion tax. As of July 2025, the seller (grantor) is legally responsible. The county clerk will not record a deed unless the fee is paid by the seller at closing.
For sellers, this may reduce net proceeds. For buyers, it may lower upfront cash requirements. Policymakers framed the shift as a way to improve affordability for buyers in high-cost markets.
Still, as Kiplinger noted, the change is a “double-edged sword”: it relieves buyers, but “could harm affected sellers looking to move within or out of the Garden State”. In practice, sellers may attempt to offset the new liability through list pricing, though market forces will ultimately determine values.
Transition Rule: November 15, 2025 Recording Deadline
Recognizing many contracts were already in motion, the law created a grace period:
- Contracts fully executed before July 10, 2025, with deeds recorded by November 15, 2025, may still qualify for the old 1% rate.
- Sellers in this situation must pay the new rate at closing but can file for a refund of the excess over 1% with the NJ Division of Taxation within one year of recording.
Missing the November 15 deadline may result in forfeiting the refund opportunity.
Why the Change? Budget Context
The mansion tax overhaul was part of New Jersey’s FY2026 budget, the largest in state history at nearly $59 billion.
The graduated structure was projected to affect only the top 2–3% of transactions, while generating over $550 million annually for housing, environmental programs, and the state’s general fund.
Governor Murphy initially proposed doubling the rate to 2% on $1M+ sales and 3% on $2M+ sales; lawmakers instead adopted the tiered structure, topping out at 3.5%.
Impact on Sellers and Buyers
Sellers
- Budget carefully: On a $2.6M sale, you may now owe $65,000 (2.5%), versus $26,000 under the old system.
- Consider thresholds: Even modest changes above brackets can significantly increase tax owed.
- Use transition relief: If eligible, record by Nov 15 to reclaim the excess above 1%.
- Plan negotiations: Since sellers now pay the fee, incorporate it into pricing discussions and net sheets.
Buyers
- Lower closing costs: You no longer owe the 1% surcharge, which may lower your upfront cash requirement.
- Expect adjustments: Sellers may adjust asking prices to reflect their tax burden.
- Check contracts: Ensure post-July 10 closings show the fee correctly on the seller’s side.
Example Scenarios
- $2,000,000 sale → 1% = $20,000
- $2,020,000 sale → 2% = $40,400
- $2,600,000 sale → 2.5% = $65,000
- $3,600,000 sale → 3.5% = $126,000
These examples show why careful planning around pricing and timing is important.
Conclusion
New Jersey’s mansion tax overhaul is one of the most significant real estate changes in years. Since July, sellers of $1M+ properties have faced a new, tiered fee up to 3.5%—while buyers have seen lower upfront costs.
The impact is concentrated in luxury markets, but for those affected, the sums are substantial. With the right planning, sellers may better manage the new liability and buyers may be better prepared to evaluate negotiations.
At OnePoint BFG Wealth Partners, we believe good planning means anticipating changes like these. If you’re preparing to sell property in 2025, now is the time to review your options and align your financial strategy with the new rules.
Disclosures
Investment advisory and financial planning services offered through Bleakley Financial Group, LLC, an SEC registered investment adviser, doing business as OnePoint BFG Wealth Partners.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information in this article has been sourced from nj.gov, Kiplinger.com, and realtor.com. The third-party information contained herein is provided for informational and discussion purposes only. OnePoint BFG does not represent this third-party information as its own. While OnePoint BFG has gathered this information from sources deemed to be reliable, OnePoint BFG has not reviewed or verified any information input by your financial professional or that of the third-party source, nor can OnePoint BFG guarantee the completeness or accuracy of this data.
OnePoint BFG does not offer legal or tax advice. This document is not a substitute for the advice of a qualified attorney or tax professional. You should not take any action based solely on the information provided on this report without seeking legal counsel from a licensed attorney or tax professional in your jurisdiction. No attorney-client relationship is formed by your use of this document.
OP #: 25-0300
