New Jersey recently made changes to what is known as the Mansion Tax. New Jersey imposes an additional tax on the transfer of certain types of real estate when the sales price exceeds $1 million. Until recently, that tax was 1%. Under new legislation, that tax is now between 1% and 3.5%, depending on the sales price.
Owners of Class 4A commercial real estate have not been able to escape this tax by transferring an entity that owns real estate rather than the real estate itself. Instead of being called the Mansion Tax, this tax is called the Controlling Interest Transfer Tax (CITT).
What Are the Changes?
The new bill (P.L. 2025, c. 69) adds four more tiers as follows:
| Sale Price | CITT |
|---|---|
| $1 million to $2 million | 1.0% |
| 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% |
Need to Know
The new law makes it clear that the tax is imposed on the seller of the property. The new tax applies to real estate contracts executed on or after July 10, 2025. For the tax NOT to apply, the contract would have had to have been executed before July 10, 2025, AND the deed must be recorded prior to November 15, 2025.
These rules apply to Class 4A commercial property owned by an entity. There are more rules and details that may have to be considered, depending on the nature of your transaction.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
