The NJ Mansion Tax: Who Pays?

September 15, 2026

The New Jersey Mansion Tax is a real estate transfer tax that applies to certain real estate transactions. Applicable properties transferred for $1 million or more incur the NJ Mansion Tax, which must be paid at closing before the deed is transferred. While this law has been in effect for a while, some 2025 provisions have revised the legislation. High-dollar real estate transfers typically require the guidance of an experienced NJ real estate lawyer who understands the changing regulations of NJ real estate law.


Here is what you need to know about the changes to the NJ Mansion Tax.


What properties are affected?


The Mansion Tax will apply to the following property types:

  • Residential homes
  • Commercial properties: including office and retail buildings, warehouses, and farmland but excluding industrial properties and vacant land
  • Property owned by entities (LLCs, corporations, partnerships, etc.)


What has changed with the NJ Mansion Tax Law?


As of June 30, 2025, the NJ Mansion Tax has changed in some important ways. Here is a summary of the provisions signed into law last year:


Effective Date: The new legal provisions will apply to any real estate transactions taking place after July 10, 2025. The law allows a “grace period” for transactions occurring during the introduction of these provisions. Any deed recorded by November 15, 2025 will be subject to the 1% flat rate.


Seller’s Obligation: Prior to July 10, 2025, real estate transactions qualifying for the Mansion Tax received a flat rate 1% tax on the purchase price of the property. The buyer paid this tax. The 2025 change shifted this obligation to the seller. It is now the seller’s responsibility to pay the NJ Mansion Tax.


New Tiered Rate Structure: While there was previously a flat rate of 1%, the new provisions allow a tiered-rate structure based on sales price. Rates are determined as follows:


  • $1 million-$2 million: 1%
  • $2 million-$2.5 million: 2%
  • $2.5 million-$3 million: 2.5%
  • $3 million-$3.5 million: 3%
  • Over $3.5 million: 3.5%


What does this mean for my real estate transaction?


Sellers need to keep the NJ Mansion Tax in mind when planning to sell a property. Sellers need to budget for higher closing costs and more tax exposure. Sellers should also be strategic about their home's list price, as even a small increase (like from $1.99 million to $2.01 million) can have major tax implications and double the tax burden.


Buyers, on the other hand, can expect more favorable terms throughout negotiations, including better flexibility on list price. Working with a seller to remain below higher tax thresholds can lead to a lower sales price.


How can this impact estate planning?


Homeowners should also consider the estate planning implications of high-dollar real estate transactions that will incur the Mansion Tax. If an estate plan includes selling a primary residence valued over $2 million to fund retirement or assisted living, paying the Mansion Tax could significantly reduce the sale proceeds. Additionally, if the property is sold after death to settle an estate, the estate would absorb this tax liability. An NJ estate planning attorney can help you plan for these expenses.


Veitengruber Law is a Monmouth County NJ real estate lawyer with experience providing expertise and guidance for high-dollar real estate transactions. If your transaction may require the NJ Mansion Tax, we can provide legal insight and support to help ensure it goes smoothly.