As you may be aware, Governor Phil Murphy and legislative leaders are in the final stages of negotiating New Jersey’s new state budget, with the statutory deadline just one week away. One of the key provisions under consideration is a significant increase in the state’s mansion tax, which could affect high-value real estate transactions.
While the final language and effective date of the proposed changes have not yet been confirmed, we want to take this opportunity to share some considerations during this period of legislative uncertainty. The proposal may raise the current mansion tax rate (currently 1% on residential and commercial property sales over $1 million) to:
– Purchase price between $1 million and $2 million, a mansion tax between 1% to 2%
– Purchase price more than $2 million, a mansion tax of 3%.
It’s not yet known if those will be the final figures. After July 1, 2025, transactions near the threshold may be directly impacted depending on the closing and recording date.
We understand this uncertainty can be challenging, and we are closely monitoring developments in Trenton. We will share any confirmed legislative updates or guidance as soon as they become available. In the meantime, any transactions with mansion tax considerations closing in the next few weeks, we will be collecting an escrow for the additional mansion tax percentage points, just to be sure that your client will be able to record their deeds in the event the legislature decides to increase the mansion tax.