$140K in Taxes on a $4M Sale? Say Hello to NJ’s New Mansion Tax!
- New Era Real Estate
- Jul 9
- 2 min read
Starting July 10th, 2025, a BIG change is coming to New Jersey’s real estate tax rules, and if you’re in the market to sell a high-end home, this one’s for you! The infamous “Mansion Tax”— an extra fee tacked onto luxury home sales, on top of the usual Realty Transfer Fee (RTF) — is officially going UP.
Previously, this tax was a flat 1% on properties over $1 million. But now, a graduated rate structure will kick in for pricier homes:
2% for homes sold over $2 million
2.5% for sales above $2.5 million
3% for homes over $3 million
… and a top rate of 3.5% for sales over $3.5 million
The big question for New Jerseyans: exactly WHO ends up paying this Mansion Tax? Under the old rules, BUYERS were responsible for covering the mansion tax. That’s changing. Thanks to a new law signed by Governor Murphy only a week ago, that tax responsibility now shifts to SELLERS for any property sold over the $1 million mark. So if you’re planning to sell a luxury home this year or next, prepare to be the one covering that fee at closing.
Unfortunately for sellers, selling a high-end home in New Jersey will now come with a higher price tag. This new tax structure is estimated to bring in $282 million in revenue for the state this fiscal year. But for sellers, the cost of the tax can be quite steep. Selling a $4 million home would now incur a 3.5% mansion tax—that’s $140,000 in Mansion Tax ALONE. And yes, that’s more than TRIPLE the original rate. If you're selling in this price range, it’s time to call your agent (and your accountant).
There is some good news: this tax hike won’t affect the vast majority of NJ sellers. ‘Average’ home sellers (those selling a home for < $1 million) won’t face any increased fees. Only about 3% of real estate transactions in New Jersey are above the $2 million mark. But for sellers in that high price tier, it’s a BIG deal. Even homes just above $1 million will now carry the 1% tax on the seller’s side, which will very likely shift how some properties are priced going forward. Luxury home prices (i.e. prices of high-end homes in areas like Margate or Longport) will start to inch upward to account for this added seller-side financial expense — prepare for prices to go UP. And if you're hovering around the $1 million threshold, this tax may be the deciding factor in your pricing strategy. Timing, pricing, and strategic planning with your listing agent just became even more important.
This change is certainly a major shake-up for South Jersey’s high-end real estate market. While buyers might get a modest break (no more 1% mansion tax for them!), sellers now need to factor this potentially very hefty new cost into their bottom line. Between the mansion tax, brokerage fees, and closing costs, a seller’s profit margin could shrink quickly (especially at the upper end of the market). Whether you’re preparing to list soon or just keeping tabs on NJ market trends, now’s the time to get informed and plan ahead. A little preparation now could save you a whole lot of moolah later. Sources: