New Jersey Amends and Increases Mansion Tax Effective July 10
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Effective July 10, 2025, New Jersey shifts responsibility for the mansion tax from the buyer to the seller, where applicable, imposes the tax on all consideration (not just consideration in excess of $1 million) and increases the former 1% rate of tax for sales of $2 million or more.
07.03.25
The $2 million sale rate applies to sales in excess of $2 million, and as sales consideration increases by $500,000, the rate increases by .5% until it tops out at a 3.5% rate for sales in excess of $3.5 million. The rates are applied to the entire consideration. In addition to covering “mansions,” the tax continues to apply to Class 4A commercial properties. Identical rates are applied to the Controlling Interest Transfer Tax for entities that own Class 4A commercial properties, also with the burden shifted to the Seller from the Purchaser. Exemptions to this tax are largely unchanged from existing law.
The effective date provides for partial refunds of taxes imposed on deeds recorded on or before November 15, 2025, if closing was pursuant to a contract fully executed before July 10, 2025. The request for a refund must be filed within 12 months. The former rates apply to sales of controlling interests in entities pursuant to an agreement that was “fully executed” before July 10, 2025, provided the transaction closes on or before November 15, 2025.
Given the ‘by July 9 deadline’ for a fully executed agreement, if you are close to signing an agreement to sell a “mansion” or 4a commercial real estate in New Jersey, it may pay to push contract completion to meet that deadline.
Author Larry Arem is a partner in the tax practice group at Klehr Harrison.