How the Proposed NJ Mansion Tax Hike Could Hurt Homebuyers, Sellers In Short Hills, NJ and Surrounding Communities

It’s no secret that the cost of living in New Jersey is already high. Now, a new proposal from Governor Murphy could make buying or selling a home even more expensive—especially in high cost and high-demand areas like Short Hills, NJ, Summit, NJ, Maplewood, NJ, Millburn, NJ, and Livingston, NJ.

As local real estate experts, we’re closely following this issue because of its potential impact on our clients—and on our already strained housing market.

What’s Being Proposed?

New Jersey legislators are considering a dramatic increase in the Realty Transfer Fee (RTF)—commonly known as the mansion tax—which is paid by buyers at closing for homes over $1 million.

Here’s what the change could look like:

• For homes sold between $1 million and $2 million, the tax would double from 1% to 2%, raising the minimum fee from $10,000 to $20,000.
  
  

• For homes over $2 million, the tax would triple from 1% to 3%, increasing the minimum fee from $20,000 to $60,000.
  
  

These changes are part of a broader effort to address the state’s budget deficit—but the consequences for everyday buyers and sellers could be severe.

Why This Matters Now

When the mansion tax was introduced in 2004, a $1 million home truly was a mansion. Today? Not so much.

In many NJ communities—including here in Maplewood, NJ or Short Hills, NJ—a $1 million home is no longer a luxury. A million dollar home well below the average sale price in many towns along the mid-town direct line. It’s often a  starter home for families or a downsizing option for seniors.

According to industry data, the percentage of homes selling above $1 million in New Jersey has nearly tripled since 2018—rising from under 6% to over 15%.

In other words, this proposal doesn’t just target the ultra-wealthy—it affects a growing share of middle-class families.

The Real Impact on Buyers and Sellers

If enacted, this tax hike would:

• Add thousands to buyers’ closing costs, making homes even less affordable
  
  

• Disincentivize homeowners from selling, especially those looking to downsize
  
  

• Worsen our inventory shortage, as fewer homes come to market
  
  

• Discourage out-of-state buyers and investors from choosing New Jersey
  
  

We're already seeing fewer home sales due to inflation and high interest rates. Increasing fees now could have a chilling effect on the entire market—from first-time buyers to retirees.

Who Would Be Hurt Most?

This policy could impact:

• First-time and first-generation homebuyers
  
  

• Middle-class families trying to move up
  
  

• Seniors selling larger homes to downsize
  
  

• Out-of-state buyers relocating to NJ for work or family
  
  

With inventory already at historic lows, adding another barrier to buying or selling will only worsen the housing crunch, reduce mobility, and keep people stuck in homes that no longer meet their needs.

What Can You Do?

Now is the time to get informed and take action:

📢 Tell your legislators that this is the wrong time to add more costs to New Jersey homebuyers. 

🗓 If you’re considering buying or selling, don’t wait. We may have a limited window before new fees take effect. Planning now could save you tens of thousands of dollars.

Bottom Line

This proposed tax hike doesn’t just impact the ultra-rich—it affects a growing share of average New Jersey residents who are trying to live, grow, and build equity in the state they call home.

As local real estate experts in the Short Hills, NJ area we are here to help you navigate this shifting landscape, understand your options, and make confident, informed decisions. Whether you're buying your first home, moving up, or preparing to sell, we can help you stay one step ahead.

📞 Contact our team today to talk through your strategy before these changes potentially become law. Email us at [email protected] so we can make time to connect.