Beginning on July 10, 2025, New Jersey will increase the real estate transfer taxes it imposes on the conveyance of certain property types, including Class 4A commercial properties, when the consideration paid for the property exceeds $2 million dollars. This legislative change will impact the tax rates applicable to the New Jersey Supplemental Realty Transfer Fee (aka the “Mansion Tax”) and to its Controlling Interest Transfer Tax (the “CITT”). New Jersey’s Division of Taxation released a Memorandum on July 2,2025, describing these changes. Additionally, these changes will shift the liability for the Mansion Tax and the CITT from the purchaser to the seller.

This creates an incentive to execute a contract for any applicable New Jersey conveyance before July 10, 2025, and to then complete the transfer of the property on or before November 15, 2025, as discussed herein.

Graduated Tax Increases

The increased Mansion Tax and CITT tax rates for any applicable property will now be based on the total consideration paid for the transfer, as listed below:

• $1 million to $2 million: 1.0% (Note: This has not changed)
• Over $2 million to $2.5 million: 2.0%
• Over $2.5 million to $3 million: 2.5%
• Over $3 million to $3.5 million: 3.0%
• Over $3.5 million: 3.5%

Tax Is Now the Seller’s Liability

Additionally, the liability imposed under the Mansion Tax and CITT will now shift from the purchaser (grantee) to the seller (grantor) for transactions occurring on or after July 10, 2025.

Timing of Increased Tax Rates

The increased tax rates applicable to the CITT will be owed for any applicable transfer of a controlling interest in an entity that owns real property in New Jersey which occurs after July 10, 2025. However, there is an exception to this increased tax rate if the controlling interest is transferred: (1) on or before November 15, 2025, and (2) under a contract or other binding agreement that was fully executed before July 10, 2025.

The increased tax rates applicable to the Mansion Tax will apply to any deed that is submitted to a county recording officer on or after July 10, 2025. However, note that New Jersey has provided limited temporary relief for the sale of certain Class 4A commercial properties, where the parties to the transaction have fully executed a contract prior to July 10, 2025, and where the deed is recorded sometime on or before November 15, 2025. In those instances, the increased Mansion Tax will be owed by the seller when the deed is recorded but the seller can then seek a refund of any tax paid in excess of a 1 percent tax rate by filing a refund claim with the New Jersey Division of Taxation within one year following the recording date of the deed.