Buying or selling a high-end home in New Jersey just became more complex. The 2025 NJ Mansion Tax is changing the game.  

As of July 10, 2025, the updated mansion tax is in full effect. Real estate professionals, investors, buyers, and sellers are scrambling to adjust to the new reality. The state has introduced a new tiered tax structure, shifting the payment responsibility from the buyer to the seller. These changes are creating significant ripple effects across New Jersey’s most desirable towns.

 

In markets such as Short Hills, Summit, Livingston, Chatham, and along the Midtown Direct line to NYC, understanding the mansion tax is crucial. It directly impacts affordability, timing, and overall strategy.

Below are the most frequently asked questions about New Jersey’s mansion tax. Discover how it can directly impact both buyers and sellers.

Northern New Jersey Real Estate Market Watch

HAs of July 2025, homes in Livingston spent a median of 44 days on the market, up from 36 days the previous year. However, real estate trends in Northern New Jersey are constantly evolving. Contact The Saritte Harel Team for expert assistance in buying and selling homes in New Jersey.

 

Top 7 New Jersey Mansion Tax Frequently Asked Questions

 

1. How does the NJ Mansion Tax affect me when buying a home in towns along the Midtown Direct train line?

Many homes along the Midtown Direct line, especially in Short Hills, Chatham, and Summit, are priced above the $1 million threshold. Reaching that price point triggers the introduction of the new Mansion Tax. Buyers are no longer directly responsible for paying this tax. However, they should expect higher list prices as sellers try to offset their added tax burden.

 

2. How does the NJ Mansion Tax affect me when buying or selling a home in Short Hills, Summit, Livingston, or Chatham?

These towns are at the center of the conversation about the mansion tax. Sellers now face a tax obligation of 1% to 3.5% based on their home’s full sale price. Meanwhile, buyers will feel the effects indirectly via higher asking prices and fewer concessions. According to the latest market reports, the average sale price exceeds $2 million in Short Hills and $1.5 million in Summit. These price points make the financial impact of the mansion tax especially significant. In high-value markets like Short Hills, Summit, Livingston, and Chatham, pricing strategy and timing are critical.

 

3. How will the NJ Mansion Tax impact inventory and availability of homes in Short Hills, Summit, Livingston, and Chatham?

The Inventory is already tight in these markets. The new mansion tax may exacerbate the issue. Some homeowners may delay selling to avoid the tax altogether. Homes between $2M and $3.5M, where the tax increases steeply, may become less common in public listings.

Buyers should expect fewer choices and increased pressure to act quickly. Sellers need to focus on timing and presentation to secure top dollar despite the new seller-side tax in place.

 

4. How does the NJ Mansion Tax affect affordability in Short Hills, Summit, Livingston, and Chatham?

While buyers don’t pay the tax directly, they’ll likely pay for it in the form of higher prices. Many sellers may factor in the mansion tax into their asking price. That means reduced flexibility for negotiation, fewer options under key affordability thresholds, and increased down payments and monthly costs. This shift could redefine what “affordable luxury” means across Essex and Union counties, even for well-qualified buyers.

 

5. Does the NJ Mansion Tax apply to second homes or investment properties?

Yes, the tax applies to any residential real estate transaction of $1 million or more. The law covers purchases of primary residences, rental properties, vacation homes, and weekend retreats. It also includes condos, co-ops, single-family homes, and multi-unit residential buildings. No exemptions apply based on the buyer’s intended use of the property.

 

6. Are any exemptions available under the NJ Mansion Tax?

There are very few exemptions to the Mansion Tax. It applies to nearly all private transactions exceeding $1 million. Limited exemptions include government agencies, nonprofit organizations, and specific affordable housing development projects. Additionally, some transactions ordered by court mandate or involving estate distributions are exempt from this requirement.

 

7. Can a buyer and seller split the cost of the Mansion Tax?

Legally, the whole responsibility lies with the seller as of July 10, 2025. However, in today’s competitive market, especially in high-demand areas, buyers are starting to offer help with the cost. Some are covering part or even all of the mansion tax to strengthen their offers. While not yet standard practice, this approach is gaining traction in multiple-offer situations and off-market deals. Negotiation is possible, but sellers should still expect to carry the full burden unless both parties agree otherwise.

 

Know the Rules. Win the Deal.

The updated mansion tax in New Jersey is more than just a closing cost. It’s a strategic factor that can affect home prices, market time, and deal negotiations.

 

Thinking of buying, selling, or moving in Short Hills, Summit, Livingston, or Chatham? This tax law is now a central part of the playbook.

 

Let’s Talk Strategy

At The Saritte Harel Team, we represent both buyers and sellers across the local market. This dual perspective gives us a deep understanding of how deals get done. We know what types of offers win bidding wars and how sellers can price their homes to maximize returns.

We’ll walk you through exactly how the NJ Mansion Tax impacts your goals, whether you're purchasing a home or preparing to sell. Rather than reacting to the new tax, take the opportunity to plan around it with expert guidance.

 

Contact us to schedule a one-on-one consultation now or send us your questions. We're here to help you make the most of this market.