On June 30, 2025, Governor Murphy signed into law significant changes to the New Jersey Mansion Tax and CITT. These amendments include increases in the fees specific to high-value properties and a shift in which party is responsible for paying it.
What You Need to Know:
- On June 30, 2025, Governor Phil Murphy signed into law Bill S4666/A5804, which amends New Jersey’s “Mansion Tax” and Controlling Interest Transfer Tax (“CITT”) by imposing additional fees on certain transfers of real property exceeding $2 million, and on transfers of equity interests in an entity which possesses, directly or indirectly, a controlling interest in classified real property in excess of $1 million.
- Additionally, sellers, rather than the buyers, are now responsible for the payment of both the Mansion Tax and CITT for certain transfers of real property valued at over $1 million.
- These newly enacted amendments will not apply to transfers with purchase and sale agreements executed before July 10, 2025, and for which the deeds are recorded (or controlling interests are transferred) before November 15, 2025.
The New Jersey Realty Transfer Fee is calculated based on a percentage of the consideration paid on the sale or transfer of real property, using an increasing rate for higher value property. When a property is over $1 million dollars, there is an additional fee, colloquially known as the Mansion Tax. The Mansion Tax was previously a 1% flat fee that applied to residential and certain classified commercial properties valued over $1 million and was historically imposed on the buyer.
The $1 million threshold has remained constant since its inception in 2004, despite the increase in property values. However, under the new formulation set to take effect on July 10, 2025, there are two major changes to the Mansion Tax. First, the burden of the tax has shifted from the property buyer to the property seller. Second, there is now a tiered system of increasing fees for transfers of property in excess of $2 million.
Under the newly enacted amendments, the transfer of property for consideration between $1 million and $2 million remains subject to a 1% tax. However, the following additional fees now apply to the total consideration:
- a 2% tax is imposed on properties where the consideration is between $2 million and $2.5 million;
- a 2.5% tax is imposed on properties where the consideration is between $2.5 million to $3 million;
- a 3% tax is imposed on properties where the consideration is between $3 million and $3.5 million; and
- any property where the consideration is over $3.5 million will face the maximum 3.5% fee.
The CITT has also been amended to provide that the burden of the tax has shifted from the property buyer to the property seller. Similar to the amended Mansion Tax, the CITT will also employ a tiered system of increasing fees based on a percentage of the consideration paid on the sale or transfer of real property or the equalized assessed value of the property, as applicable. These new fees are as follows:
- a 1% tax is imposed on properties where the consideration (or the equalized assessed value of the property, as applicable) is between $1 million and $2 million;
- a 2% tax is imposed on properties where the consideration (or the equalized assessed value of the property, as applicable) is between $2 million and $2.5 million;
- a 2.5% tax is imposed on properties where the consideration (or the equalized assessed value of the property, as applicable) is between $2.5 million to $3 million;
- a 3% tax is imposed on properties where the consideration (or the equalized assessed value of the property, as applicable) is between $3 million and $3.5 million; and
- any property where the consideration (or the equalized assessed value of the property, as applicable) is over $3.5 million will face the maximum 3.5% fee.
These newly enacted amendments will not apply to transfers with purchase and sale agreements executed before July 10, 2025, and for which the deeds are recorded (or controlling interests are transferred) before November 15, 2025. Accordingly, property owners should be aware of these deadlines while finalizing purchase and sale agreements. The increase in fees will have effects on closing costs for high-value residential and commercial properties and will be an important consideration in investment and development decisions moving forward.
This alert includes contributions from Summer Associate Nicole Frankel.
