On June 30, 2025, Governor Murphy signed the Fiscal Year 2026 Appropriations Act into law, fundamentally changing how New Jersey taxes high-value real estate transactions. The most significant change: the Mansion Tax responsibility has shifted from the buyer to the seller for all contracts executed on or after July 10, 2025.
This is a substantial departure from decades of practice. Previously, buyers of properties over $1 million paid a flat 1% supplemental fee at closing. Now, sellers bear the cost — and the rates are no longer flat.
The reformed Mansion Tax introduces a tiered system based on the sale price:
For a $3 million property, the seller now faces a $75,000 fee rather than the $30,000 a buyer would have previously paid. That is a significant increase that directly affects net proceeds.
The legislation also amends the Controlling Interest Transfer Tax, which applies to sales or transfers of controlling interests in entities that own Class 4 commercial real property. The responsibility for payment similarly shifts from purchaser to seller, and the graduated rates mirror those of the residential Mansion Tax.
This change has major implications for commercial real estate investors, developers, and entities holding property in LLCs — a common structure in New Jersey and New York.
If you are selling a property valued above $1 million in New Jersey, these changes directly impact your closing costs and net proceeds. Sellers should factor the new graduated fees into their pricing strategy, and buyers should understand that the market may adjust as sellers price these costs into their asking prices.
For contracts executed before July 10, 2025, a grace period applied: if the deed was recorded on or before November 15, 2025, any graduated fees paid in excess of 1% would be refunded. That window has now closed.
Understanding how these changes affect your specific transaction requires careful analysis. Kambo Law advises both buyers and sellers on the tax implications of real estate transactions in New Jersey and ensures that closing documents accurately reflect the current law.
Need legal guidance? Contact Kambo Law, PLLC to schedule a consultation. We serve clients across New Jersey and New York.
