New Jersey Real Estate Transfer Taxes: 2025 Update
On June 30, 2025, New Jersey Governor Phil Murphy signed the FY 2026 budget into law, ushering in major changes to the state’s “mansion tax.” Notably, the supplemental fee now shifts from buyer to seller obligation, with a tiered structure for luxury properties. The traditional Realty Transfer Fee remains in place for all residential property sales.
Law Changes
Mansion Tax Overhaul
- New thresholds & rates (seller‑paid):
– $1M – $2M → 1% (formerly buyer‑paid 1%)
– $2M – $2.499M → 2%
– $2.5M – $2.999M → 2.5%
– $3M – $3.499M → 3%
– $3.5M+ → 3.5% - Effective immediately for closings on or after June 30, 2025.
Realty Transfer Fee (RTF)
- Still applies to all residential property transfers.
- Based on a graduated scale (roughly $2–$4 per $500 of sale value), still seller‑paid.
Non‑resident Withholding
Non-resident sellers must prepay 2% of sale as Gross Income Tax withholding, credited toward state taxes.
Fee Structure Grid
| Sale Price Range | Mansion Tax (Seller‑Paid) | Additional Notes |
| $1M – $2M | 1% | Shifted from buyer |
| $2M – $2.499M | 2% | New tier |
| $2.5M – $2.999M | 2.5% | — |
| $3M – $3.499M | 3% | — |
| $3.5M and above | 3.5% | — |
- Plus: Realty Transfer Fee, based on sale price tiers.
- Plus: 2% withholding for non-resident sellers.
What Sellers Should Know
- The supplemental mansion tax adds significant closing costs on homes above $1M.
- Sellers of luxury homes (e.g., in Avalon, Margate, Cape May) now face up to 3.5% tax solely for this tier.
- Full closing cost calculation must include:
– Tiered mansion tax
– Standard RTF
– 2% non-resident withholding (if applicable)
Next Steps for Sellers
- Reevaluate pricing and net proceeds. These fees reduce your take‑home amount.
- Work with your agent/title company/attorney to integrate these costs into the listing strategy.
- Non-resident sellers must plan for the 2% withholding and reclaim or apply it via tax filings.
- Consult professionals to leverage exemptions (e.g., senior/disabled seller RTF exemptions) and ensure accuracy.
Avoid Budget Surprises
The FY 2026 changes mark a clear shift: sellers, not buyers, bear the financial impact of the mansion tax tiers. For luxury properties, this change is substantial. Smart, early planning and professional guidance are essential to avoid budget surprises at closing. We’re here to help. Contact us today!
