NJ ‘mansion tax’ rates increase under new bill, paid by sellers!

In this episode of Brach Eichler Talks, Real Estate attorneys Allen J. Popowitz and Jeffrey H. Itzkowitz break down New Jersey’s newly amended “mansion tax” law, signed into effect on June 30, 2025. The new law, which shifts the tax burden from buyers to sellers and introduces a tiered tax rate, significantly impacts certain residential and commercial property transactions beginning July 10. Tune in to learn how the law applies to Class 2, 3A, 4A, and cooperative property sales, and what buyers and sellers need to know about compliance, exceptions, and potential refunds.

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If you believe or question whether your transaction will be affected by this new law, please contact:

Allen J. Popowitz, Esq., Member and Chair, Real Estate Practice at 973-403-3134 or [e-mail]

Jeffrey H. Itzkowitz, Esq., Member, Real Estate Practice at 973-403-3158 or [e-mail]

*This is intended to provide general information, not legal advice. Please contact the authors if you need specific advice.

Episode Transcript

(00:00):
…Thank you for tuning in to the Brach Eichler talks podcast where

(00:06):
we explore and discuss today's trending legal topics.
In this episode, we'll discuss a recent real estate law alert from Brach Eichler titled New
Jersey 'mansion tax' rates increase under new bill, paid by sellers.
On June 13, 2025, Governor Murphy signed into law new legislation under assembly bill #

(00:27):
5804, effective July 10, 2025, which has significant impact on real estate
transactions involving certain properties… The properties affected are those classified as
either class 2, which involve the sale of single family homes, sale of individual condominium
units, and properties consisting of one to four units.

(00:49):
Class 3A, pertaining to the sale of a farming property with an improved dwelling located on it.
Class 4A pertaining to sales of commercial properties, and
sales of cooperatives affected properties.
Fortunately, with respect to the sale or purchase of multifamily classified as
4C, the new law has no effect and no changes.

(01:11):
The new legislation becomes fully effective July 10, 2025.
It is effective with respect to the effective properties for transactions which were placed
under contract to sell on or after July 10, 2025.
For properties under contract on or before July 9, 2025, a hybrid in the application exists,

(01:31):
which will be discussed later in this article.
For affected properties which were under contract on or after July 10,
2025 and closed thereafter post law transactions.
The responsibility to pay the mansion tax has shifted from the buyer to the seller so that the
buyer no longer pays any mansion tax at the time of closing… Further, rather than being a

(01:55):
flat rate of one percent on the consideration paid for the property, the calculation is now on
a tiered basis and is paid by the seller at the time of closing based upon the total consideration paid for the property.
It should also be noted the following applies not only to the sale of affected properties, but
also applies to transactions involving the transfer of controlling interests in a company that owns affected property.

(02:19):
The calculations based upon the total consideration paid are as follows.
Zero dollars to nine hundred and ninety nine thousand nine hundred and ninety nine dollars and
ninety nine cents, no mansion taxes payable, no change.
One million dollars to two million dollars, one percent, no change.
Two million dollars and one cent to two point five million dollars, two percent of the total

(02:42):
consideration paid, two point five million dollars and one cent to three million dollars, two
point five percent of the total consideration paid, three million dollars and one cent to three
point five million dollars, three percent of the total consideration paid.
Above three point five million dollars, three point five percent of the total consideration paid.
For affected properties, which were already under contract on or before July 9, 2025

(03:08):
, but which close on or after July 10, 2025, but before November 15, 2025, the
buyer will still pay one percent of the total… mansion tax due.
However, it should be noted for transactions that fall within the parameters of this paragraph

(03:29):
, the seller may apply to the state of New Jersey for a refund of the amount paid by the seller
above the one percent paid by the buyer, provided the transaction closes on or before November
15, 2025 and provided the contract was
executed on or before July 9, 2025.
If you believe or question whether your transaction will be affected by this new law, please contact Alan J.

(03:53):
Popowitz, Esq., Member and Chair, Real Estate practice at 973-403-3134 or
[e-mail] or Jeffrey H.
Itzkowitz, Esq. Member Real Estate practice at 973-403-3158, or [e-mail].
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(04:17):
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For more information and resources, visit BrachEichler.com.
This is intended to provide general information, not legal advice.
Please contact the authors if you need specific legal advice.
Brach Eichler LLC is a full service law firm based in Roseland, New Jersey with over eighty attorneys.

The firm is focused on the following practice areas (04:38):
healthcare law, real estate, litigation
, trusts and estates, business transactions and financial services, personal injury, criminal
defense and government investigations, labor and employment, environmental and land use,
family law services, patent, intellectual property, and information technology

(05:00):
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