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Under the new law, Assembly Bill 5804, sellers of homes over $1 million will absorb what had historically been a 1% buyer-paid fee, with significant increases for higher-value properties. The rates for sellers rises to:
- 2% over $2 million
- 2.5% over $2.5 million
- 3% over $3 million
- 3.5% over $3.5 million
That means a seller of a $4 million home will now pay $150,000 in transfer taxes, up from $40,000, if they close after July 10.
Real estate agents across North Jersey say the move, which seemed to come out of nowhere, has already sent shockwaves through the market, with sellers scrambling to raise prices, delay closings, or even consider legal action.
“I had about 20 phone calls today,” Taylor Lucyk of The Lucyk Group said on a call with Daily Voice on Tuesday, July 1. “Clients are confused. They feel they’re being completely taken advantage of on short notice, and it’s egregious.”
“They feel it was a bait and switch, and there was zero grace period,” added Jaclyn Chakonis of the Stacy Esser Group. “It came out of nowhere.”
The bill was introduced on Friday, June 26 by Assemblywoman Verlina Reynolds-Jackson (D-Trenton) and Senator Benjie E. Wimberly (D-Paterson). Four days later, it was passed.
The new law keeps the existing 1% mansion tax, which was previously a buyer-paid fee, and adds a tiered surcharge on top — now paid by the seller.
A seller may apply for a refund on any amount above 1% if their contract was signed before July 10 and the closing is recorded before Nov. 15, but title companies are still collecting the full amount at closing.
Vulnerable Sellers Hit Especially Hard
Some of the hardest-hit clients, agents say, are those who can least afford the new tax.
“There’s a misconception that anyone selling a home over $2 million can easily absorb added costs — but that’s simply not true,” Stacy Esser said. “We have clients right now facing very personal challenges — including the aftermath of death and divorce — for whom this added financial burden is destabilizing. This isn’t a ‘wealthy seller’ problem. For many, the home is their only real asset.”
One client is selling because she can't afford to stay in it. Another has little other assets aside from the house. They're barely getting by as it is, and legislators don't know that, both Esser and Lucyk said, with Lucyk noting that it could impact someone's retirement or quality of life.
"For someone who has no more money coming in, an additional $3,000 or $4,000 is an enormous amount of money," she said. "$60,000 is a lot of money."
Lucyk noted that a $2 million home is common in North Jersey markets, referring to Paramus, Glen Rock, and Ridgewood. “That’s not luxury. Luxury would be $5 million or more. The escalating scale is very unjust.”
Roi Klipper of the Klipper Group agreed.
"It’s not a luxury mansion tax," he said. "They didn’t think this bill through, and I think there was a better way to do this, so it’s equitable and fair."
Even buyers will feel the effects, realtors say — just in different ways.
"Sellers will inevitably raise their prices to offset the burden of the new tax. When higher-end home prices rise, it creates upward pressure on the entire market — pushing mid-range and entry-level prices up as well," Chakonis said. "This ripple effect will make housing even more unaffordable, especially for first-time and middle-class buyers trying to stay in the area."
“If I was a builder right now, I wouldn’t want to build a $3 million home,” Klipper said. “That’s the way trends are set. The buyer is the one who’s going to end up paying.”
“You’re going to lose 50% [of development],” Lucyk added. “It’s going to slow down development and luxury sales.”
Some sellers may now reconsider listing altogether.
"Maybe they'll start renting out the property and buy something out of state, or lower the price to under $1 million," Klipper said. "This is really going to cause a lot of headaches for buyers."
Lucyk feels that tax is hitting people who have already invested in the communities: “The ones who put kids through the school system, invested in municipalities for years and years. You’re affecting those.”
“The people coming in to buy — to tax them, I could side with,” he added. “But to tax the people that have already paid so much into these towns… it doesn’t make sense.”
Realtors Expect Workarounds And Hope For Change
Klipper anticipates a rocky adjustment period, while Chakonis says she wouldn’t be surprised if some people start finding creative ways to avoid the new costs.
“Frustration is mounting,” several agents said, as many clients now face tens of thousands of dollars in unexpected fees.
“For now, they’re holding out hope that the November election could bring a change.”
One source familiar with legislative discussions told Daily Voice the bill was rushed through in order to avoid a state shutdown, and lawmakers may already be preparing a repeal or restructuring package.
According to the source, the new plan could bundle a mansion tax rollback with five or six other laws, replacing the current tiered system with a flat 2% fee on home sales over $5 million — a structure modeled after California.
The revised legislation could reportedly move before July 10, when the current law is set to take effect.
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