What The Mansion Tax Means for New Jersey Home Sellers

By William “Bill” Boswell

Bill is widely known as one of New Jersey’s most sought after real estate agents and is a sales associate of Keller Williams Prosperity Realty.

Did you know you may have to pay the “mansion tax” even if you don’t live in a mansion? In New Jersey, this tax has been around for many years, but it is no longer called the mansion tax, as it was recently renamed the supplemental real estate tax. The change is not only in the name because this tax can have a much larger impact than many homeowners realize.

What is the supplemental real estate tax? The supplemental real estate tax requires the seller to pay a fee on homes sold for more than $1 million. If the property sells for more than $2 million, that percentage continues to increase until it reaches a maximum of 3.5%. Sellers must also pay the state’s regular real estate transfer tax, which makes the total cost even higher.

Why do many owners think it will not affect them? Most people hear the phrase “mansion tax” and believe it only applies to large luxury estates and that they’ll never qualify. However, this is where many homeowners are mistaken. Real estate values in New Jersey have historically moved in one direction, and that direction is upward. A property purchased for $600,000 or $700,000 can appreciate significantly in 10 to 15 years and may rise above $1 million.

The long-term impact on everyday families. This tax will not only affect luxury home sales. It will eventually reach regular homeowners who plan to sell for retirement, relocation, or downsizing. Younger buyers who worked for years to enter the market may find themselves paying the tax when it comes time to move into a larger property. What was once viewed as a tax on the wealthy may quickly become a financial burden for middle-class families.

Signs that the tax is already widespread. Several counties in New Jersey already report average home prices above $1 million. These are not lavish estates but standard single-family homes. The rise in average prices shows that the tax has shifted from targeting only high-end properties to impacting ordinary neighborhoods. This means an increasing number of sellers will see the supplemental real estate tax as part of their closing costs in the years ahead.

As a homeowner, it is important to prepare for the possibility of paying this tax when it comes time to sell. Understanding it now allows you to plan so there are no financial surprises later. Being aware today will make the process easier in the future. If you are thinking about selling and want clear guidance, call or text me at 973-224-4605 or email me at bill@northjerseyluxury.com. I can walk you through the details and give you a personalized plan so you feel confident when it is time to list your home.