N.J.S.A. 46:15-7.2 Mansion Tax: Rates, Exemptions, and Refunds

The NJ mansion tax is a supplemental fee under N.J.S.A. 46:15-7.2 on deed transfers of certain New Jersey properties sold for more than $1,000,000. As of July 10, 2025, the seller pays it, and the rate runs from 1% up to 3.5% of the full sale price depending on the price tier. The fee is on top of the standard realty transfer fee and is collected when the deed is recorded.¹

Current Rates by Sale Price

The percentage applies to the entire consideration, not just the amount above $1,000,000. Each bracket uses a single rate on the full price:

Over $1,000,000 up to $2,000,000: 1%
Over $2,000,000 up to $2,500,000: 2%
Over $2,500,000 up to $3,000,000: 2.5%
Over $3,000,000 up to $3,500,000: 3%
Over $3,500,000: 3.5%

A sale at $1,800,000 produces a fee of $18,000 (1% of the full price). A sale at $2,200,000 produces $44,000 (2% of the full price). Because the higher rate applies to the entire consideration, crossing a bracket by a single dollar can more than double the fee. Price negotiations near a boundary deserve careful math.²

Who Pays

The seller (grantor) owes the fee. Before July 10, 2025, the buyer paid a flat 1%; the 2025 amendment flipped the obligation to the seller and introduced the graduated scale. Parties sometimes negotiate the economic cost back into the purchase price, but the legal duty sits with the seller, and the deed will not be recorded until the fee is paid.²

Which Properties Are Covered

The fee reaches deed transfers of property classified by the municipal assessor as:

Class 2 residential (single-family homes, condominiums, and other residential property)
Class 3A farm property, but only when the farmland includes a building intended or suited for residential use
Class 4A commercial (commercial property other than industrial or apartment buildings)
Cooperative units as defined under New Jersey’s cooperative recording act

Industrial property (Class 4B) and apartment buildings (Class 4C) are not covered.³ What controls is the assessor’s classification, not how the buyer plans to use the property. For mixed-use parcels, confirm the classification before closing.

Exemptions

A sale over $1,000,000 can still avoid the fee in these situations:

The buyer is an organization the IRS has recognized as exempt under Section 501(c)(3).²
The transfer is incidental to a corporate merger or acquisition, and the equalized assessed value of the real estate is less than 20% of the total value of all assets exchanged in the deal.¹
The buyer of a one- or two-family residence is a senior citizen, blind person, or disabled person.¹

Any exemption claim must be documented on the filing form at recording. Exemptions that apply to the standard realty transfer fee (such as certain family transfers) are governed by other provisions and do not automatically carry over to the mansion tax.

Refund for Contracts Signed Before July 10, 2025

The amendment includes a transition rule for deals in progress when the law changed. If the deed was recorded on or before November 15, 2025, and the contract was fully executed before July 10, 2025, the seller can claim a refund of anything paid above the old 1% rate. The claim must be filed with the New Jersey Division of Taxation within one year of the recording date.¹

Example: a $2,500,000 sale under a pre-July contract, recorded in August 2025, is charged 2.5% ($62,500) at closing. The refund returns the amount above the old 1% ($25,000), or $37,500. Sellers who recorded after November 15, 2025, owe the full graduated rate regardless of when the contract was signed.

How It’s Filed and Paid

Every covered sale over $1,000,000 must include Form RTF-1EE, the “Affidavit of Consideration for Graduated Percent Fee.” The seller completes it, has it notarized, and submits it with the deed at the County Clerk’s office or Register of Deeds. The form asks for the municipal code, block, and lot, and the applicable property class; if an exemption is claimed, the legal basis goes on the form.⁴ It is available from the Division of Taxation website or at the county recording office, and county staff verify the calculations before accepting the deed.³

Stacking With the Standard Realty Transfer Fee

The mansion tax is in addition to New Jersey’s standard realty transfer fee, which applies to nearly all transfers and uses its own graduated structure topping out at $6.05 per $500 of consideration for amounts above $1,000,000.⁵ Both are paid by the seller and collected together at recording. On a $2,000,000 residential sale, the seller owes the standard RTF across all its brackets plus a $20,000 mansion tax. Ask the closing attorney for a full fee breakdown before settlement.

Federal Tax Treatment

The fee is not deductible as an itemized expense on a federal income tax return. The IRS treats transfer taxes on the sale of property as nondeductible.⁶ Sellers may be able to add the fee to their cost basis, which reduces taxable capital gain on the sale. A tax professional can confirm the treatment for a specific transaction.

1
New Jersey Legislature. P.L. 2025, c.069
2
Justia. New Jersey Code 46:15-7.2 – Additional Fee on Certain Transfers of Real Property Over $1,000,000
3
New Jersey Division of Taxation. Realty Transfer Fee
4
State of New Jersey Department of the Treasury. Affidavit of Consideration for Graduated Percent Fee
5
New Jersey Division of Taxation. Realty Transfer Fee FAQs
6
Internal Revenue Service. Deductible Taxes