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the staff of the Ridgewood blog
Ridgewood , NJ — As part of the newly passed $58.78 billion FY 2026 New Jersey state budget, major changes are coming to the state’s real estate tax structure — particularly the “Mansion Tax.” The revamped policy will increase taxes on high-end property sales and shift responsibility from buyers to sellers, significantly impacting the state’s luxury real estate market.
💰 What Is New Jersey’s Mansion Tax?
Originally enacted in 2004 under then-Gov. Jim McGreevey, the New Jersey Mansion Tax, officially known as the “Assessment on Real Property Greater than $1 Million”, required buyers of properties over $1 million to pay an additional 1% realty transfer fee at closing.
🔁 What’s Changing in 2025?
Under the new legislation effective July 10, 2025, the tax burden now falls on the seller, not the buyer. But that’s not the only change — rates have increased on more expensive properties.
📊 New Mansion Tax Rate Structure:
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💲$1M–$2M: 1% tax (unchanged, but now paid by seller)
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💲$2M–$2.5M: 2% tax
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💲$2.5M–$3M: 2.5% tax
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💲$3M–$3.5M: 3% tax
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💲Over $3.5M: 3.5% tax
This new progressive structure significantly raises the costs for sellers of luxury homes and commercial properties.
🏘️ What Properties Are Affected?
These updated tax rates apply to:
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Residential real estate
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Most commercial properties
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Certain farm properties
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Cooperative units (co-ops)
Exemptions are available and listed on the New Jersey Division of Taxation website.
🏦 Why the Change?
The mansion tax reform is expected to generate more than $550 million in revenue annually. These funds will be directed to:
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New Jersey Affordable Housing Trust Fund
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Shore Protection Fund
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Highlands Protection Fund
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New Jersey General Fund
The shift from buyers to sellers reflects an effort to ease affordability pressures on homebuyers, especially first-time homeowners.
🏠 How This Affects You
If you’re planning to sell high-value real estate in New Jersey, prepare for significantly increased closing costs starting July 10. Sellers may need to reconsider pricing strategies or negotiate deals differently due to the new tax burden.
Real estate professionals, attorneys, and tax planners are urging sellers to review their portfolios now and understand how this will impact transactions going forward.
📅 When Does It Take Effect?
🗓️ Effective Date: July 10, 2025
If your sale closes on or after this date, the new rules apply.
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Every tax starts out small, then it grows and grows and grows.
Politicians love to spend other peoples money.
Yeah, just look at Congress.
I remember when the sales tax was set at 3%…………………
And the first time I had to pay it.
Just another way to shove it up the taxpayers ass
Get these assholes out of office!