On June 30, 2025, Governor Murphy signed into law bill A5804/S4666 which amends the state’s supplemental realty transfer fee (“Mansion Tax”) and Controlling Interest Transfer Tax (“CITT”).
The Mansion Tax was previously a 1% fee imposed on the buyer of residential and certain commercial property valued over $1 million. Under the amended law, the burden of the Mansion Tax has shifted from the buyer to the seller. Additionally, the tax substantially increases for properties valued above $2 million.
The affected property classes are Class 2: Residential, Class 3A: Farm but only if the property includes a building intended or suited for residential use; Cooperative unit; and Class 4A: Commercial.
New Tiered Tax Rate:
- a 1% tax is imposed on properties where the consideration is between $1 million and $2 million;
- 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% tax.
The CITT applies to the sale or transfer of a controlling interest in an entity which owns, directly or indirectly, Class 4A commercial properties. Under the amended law, similar to changes to the Mansion Tax, the burden of paying the CITT has shifted from the buyer to the seller, and the tax substantially increases for properties valued above $2 million. The CITT tiered tax rate mirror those of the Mansion Tax above.
These amendments to the Mansion Tax and CITT will not apply to transfers pursuant to a contract fully executed before July 10, 2025, provided that the deed is recorded (or controlling interest transferred) before November 15, 2025.
Property owners should be aware of these newly enacted amendments and increased transfer costs when negotiating purchase and sale agreements. The increase in fees will be an important consideration in shaping future investment decisions.