New Jersey’s so-called mansion tax takes effect July 10, shifting thousands in extra costs to homeowners selling high-value properties.
For years, the mansion tax was a flat 1% fee on homes selling for more than $1 million, usually paid by the buyer. Now, the charge moves to the seller—and grows steeper for pricier deals.
Higher Rates, Broader Reach
Under the new rules, homes selling for $1 million to $2 million stay taxed at 1%. Sales above $2 million face progressive rates: 2% up to $2.5 million, 2.5% up to $3 million, 3% up to $3.5 million, and 3.5% for anything higher.
A homeowner selling for $3.5 million could now owe over $47,000 at closing, nearly double the old cost.
Rising home prices mean more sellers will be affected. The number of million-dollar home sales in New Jersey has more than doubled since 2019, from under 5,000 to nearly 11,000 last year. More than 2,500 have sold in early 2025 alone.
Budget Boost, Market Uncertainty
Lawmakers expect the tax to generate $280 million in its first year to help fund the state’s $58.8 billion budget. The money will go to affordable housing, coastal protection and other programs.
But real estate groups warn the change could shrink listings as owners rethink selling or price homes just below key thresholds to avoid higher fees. Some may try to negotiate for buyers to share the tax hit.
New Jersey joins New York City, Los Angeles and other places adding mansion taxes to fund local budgets. As home prices climb, what counts as a “mansion” keeps shifting.
The updated tax applies to deals closing on or after July 10. Sellers planning to list this summer should check how the new mansion tax might affect their bottom line.
The New Jersey Digest is a new jersey magazine that has chronicled daily life in the Garden State for over 10 years.