The New Jersey “mansion tax”—also known more officially as the Graduated Percent Fee—has been overhauled under legislation signed on June 30, 2025, and now takes effect on July 10, 2025 (Bressler).
🏠 What Changed?
✅ Who Pays
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Before July 10, 2025: Buyers paid a flat 1% fee on property sales over $1 million.
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Starting July 10, 2025: That fee is shifted entirely to sellers (grantors), not buyers (Troutman Pepper Locke - Homepage).
📊 New Tiered Fee Schedule on Full Sale Price:
| Sale Price | Mansion Tax Rate (Seller‑Paid) |
|---|---|
| $1M – $2M | 1% |
| $2M – $2.5M | 2% |
| $2.5M – $3M | 2.5% |
| $3M – $3.5M | 3% |
| Over $3.5M | 3.5% |
These rates apply to the entire sale price, not only the portion above $1M (KRS CPAs, LLC, Bressler, Mandelbaum Barrett PC).
🌊 Impact for Ocean City, NJ Property Owners
Sellers in Ocean City:
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If your property sells for over $1 million:
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You’re now responsible for the graduated mansion tax, depending on the final sale price.
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On a $2.7 million sale, for instance: $2.7M × 2.5% = $67,500 payable by you.
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You still owe the standard Realty Transfer Fee (RTF), calculated separately based on tiers (e.g. $5.80 per $500 above $850K) (NJ REALTORS® › New Jersey REALTORS®, Ellis Law, P.C., NJ.gov).
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If you are a non-resident seller, plan for the mandatory 2% gross income tax withholding at closing (non‑refundable, but creditable against state tax obligations)
Buyers in Ocean City:
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Under the new law, buyers no longer pay the 1% mansion tax, which may lower closing costs.
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However, sellers may increase listing prices to offset their new tax burden.
⏳ Transitional Period & Refund Opportunity
If a purchase contract was fully executed before July 10, 2025, and the deed is recorded on or before November 15, 2025, the seller is entitled to refund the difference between what was paid under the new tier and the old 1% rate—if the new rate exceeded 1% (Ellis Law, P.C., Bressler). Refund applications must be submitted within 12 months of deed recording.
🗓 Specific Implications
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Effective date: All transfers recorded starting July 10, 2025 trigger the new structure.
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Contract timing: Only contracts fully signed (out of attorney review) before July 10 are eligible for transitional refund treatment.
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Ocean City considerations:
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Though Ocean City property taxes are separate municipal matters paid quarterly, this mansion tax is a one-time fee at closing.
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Sellers should account for the new tax when calculating net proceeds.
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Buyers may want to factor in how sellers handle this cost in listing strategy.
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✔️ Summary
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The mansion‑tax is now a seller obligation in transactions over $1M, with graduated rates rising to 3.5%.
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Buyers pay no mansion tax under the new system.
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Sellers in Ocean City must plan for these costs and adjust pricing or net goals accordingly.
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Pre‑July contracts recorded by mid‑November may qualify for partial refunds.
🔍 Next Steps
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If you're a seller, review your contract date and ask your agent or attorney to calculate both the mansion tax and the standard RTF, plus any non‑resident withholding if applicable.
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If you're a buyer, use the seller’s added tax exposure to inform negotiations.
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Consider professional consultation with a real estate attorney or CPA to properly plan under the new rules.
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Check the NJ Division of Taxation forms (like RTF‑3) if you're eligible for a refund due to pre‑July contracts
Let me know if you’d like help estimating numbers for a specific property or sale price!
