New Jersey Real Estate Law Update: Significant Changes to New Jersey Fees on Real Estate Transfers over $1,000,000

New Jersey real estate law received a significant change in the fees charged to buyers and sellers in NJ real estate transactions.

On June 30, 2025, New Jersey enacted P.L. 2025, c. 69, which amends the so-called “Mansion Tax”.  Pursuant to the prior legislation, adopted in 2004, residential properties and certain commercial properties which sold for over $1 million in New Jersey were subject to a “Mansion Tax” which required the buyers of the real estate to pay 1 percent of the purchase price to the State of New Jersey.

Under the new law, a buyer no longer has to pay the 1% “Mansion Tax” and as of July 10, 2025, sellers will pay a progressive fee for properties sold for more than $1 million. The fee on sales between $1 million and $2 million remains set at 1 percent.  For a sale price over $2 million but below $2.5 million, seller will pay 2 percent of the sales price and fee—which roughly translates to an additional $40,000 expense. Properties over $3.5 million would see sellers facing a fee hike of up to 3.5 percent.

These are the progressive rates that property sales over $1 million will be subject to:

For properties costing:

• Over $1 million but not more than $2 million:                1.0%
• Between $2 million and $2.5 million:                             2.0%
• Between $2.5 million and $3 million:                             2.5%
• Between $3 million and $3.5 million:                             3.0%
• Over $3.5 million:                                                          3.5%

Transactions subject to these fees include commercial real estate, residential properties, certain farm properties with residential structures, cooperative units, and non-deed transfers involving a controlling interest in entities owning real property.

While the tax is imposed on sellers, the parties to a transaction are permitted to shift responsibility for the fee in the contract of sale for the real property between the parties.

This fee is effective on and applies to all transactions closing on or after July 10, 2025.  However, under section 2 of P.L. 2025 c. 69, certain transactions are eligible for a refund of that portion of the Graduated Percent Fee which exceed 1% of the consideration paid.  If a transaction meets the following criteria, the seller (or grantor) of the property may submit a claim for a refund of the excess fee over 1% of the purchase price if:

• the deed states consideration over $2 million;
• the transaction is pursuant to a written contract which was fully executed prior to July 10, 2025; and
• the deed must be recorded on or before November 15, 2025.

The seller must submit a Claim for Refund by submitting form RTF-3 within one year following the date the deed was recorded by the county clerk or registrar.  The RTF-3 must be submitted with the following documents: copy of recorded deed; complete copy of fully executed contract of sale; and the official fully executed settlement statement for the transaction.

These changes are significant shifting costs from Buyer to Seller and increasing those costs for properties selling in excess of $2 million.   The parties to the transaction must consider these costs when submitting offers to purchase, accepting offers to purchase, and negotiating the terms of any sale of real New Jersey estate.

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