How Will Governor Murphy’s Latest Tax Proposal Impact NJ Real Estate? - 4/4/25

Governor Phil Murphy has proposed an increase in New Jersey’s real estate "mansion tax" which would raise questions for both sellers and buyer, alike, across the state. This move, aimed at generating additional revenue for state initiatives, such as affordable housing programs, could have a ripple effects on the housing market...

Here are the proposed changes that primarily affect the "mansion tax" rate on real estate sales $1 million+ in NJ, which is currently 1%, typically paid by the buyer.

• For property sales between $1 million and $2 million: The tax would double from the current 1% to 2%

• For property sales over $2 million: The tax would increase to 3%

While details are still unfolding, and appears the proposed hike would primarily impact higher-priced properties, any increase in transaction costs can influence home values, buyer demand, and overall market activity. And with the market continuing the appreciate, a $1 million home is not as luxurious as it once sounded even 10 years ago, with many modest homes now valued above $1 million.

Sellers may feel the effects of buyers adjusting their offer strategies to offset the added expense and may even be presented with more concessions. Investors and those purchasing luxury properties might see the sharpest increases, adding another line item on their cost of acquistion, squeezing down their ROI.

What do you think? How do you think this will affect home sales and property values in our area?