Buying a home in Jersey City at or above $1,000,000? You will likely encounter New Jersey’s so‑called mansion tax. It is a one‑time surcharge collected at closing, and it can surprise buyers who have not budgeted for it. You want clarity on what it is, who pays it, and how to plan for it as you finalize your loan and contract.
In this guide, you will learn how the tax works in New Jersey, what it means for Jersey City buyers, simple cost examples, and the steps to take so nothing derails your closing. Let’s dive in.
What the NJ mansion tax is
New Jersey imposes a state surcharge on real property transfers when the total consideration is $1,000,000 or more. In everyday terms, buyers often call it the mansion tax. It is part of the state’s realty transfer fee system and is administered by the New Jersey Division of Taxation.
When it applies in NJ
- Threshold: The surcharge applies when the sale price and any included consideration total $1,000,000 or more.
- Rate: The amount is commonly 1% of the total consideration. It is calculated on the full price, not just the portion above $1,000,000.
- Where you will see it: It is added to your closing costs and typically collected at closing.
Who pays in practice
Legally, your closing agent or title company handles filing and remitting the fee to the state. In practice, the cost is commonly charged to the buyer as a closing cost. Payment is negotiable in the purchase contract, so you can ask the seller to contribute or cover it, but do not assume that will be accepted.
How it works at closing in Jersey City
What counts as consideration
The state looks at the full consideration for the transfer, not just the sticker price. That includes the sale price and any additional items that are part of the price, such as an assumption of a mortgage, seller financing, or other non‑cash consideration. Attempts to split a deal into multiple contracts or payments to stay under the threshold can be aggregated by the Division of Taxation. For complex structures, involve your attorney early.
Filing and payment
Your title company or closing attorney will prepare the realty transfer fee documents and remit the surcharge to the state at or right after closing. You should see the mansion tax listed on your Closing Disclosure or HUD‑1 as a line item. Confirm the amount and who is paying well before your closing date.
Other local fees to expect
Hudson County recording fees and clerk charges are separate from the mansion tax. You will also see standard closing costs such as title insurance, lender fees, attorney fees, prepaid taxes and insurance, and escrows. Build these into your cash‑to‑close plan along with the surcharge.
Examples for Jersey City buyers
Simple cost examples
- Purchase price $1,000,000 → mansion tax = $10,000
- Purchase price $1,250,000 → mansion tax = $12,500
Remember, once the price reaches $1,000,000, the 1% applies to the entire consideration, not just the amount over the threshold.
Budgeting and loan approval
Include the surcharge in your cash‑to‑close estimate unless your contract specifies otherwise. Some lenders do not allow this state fee to be financed in the mortgage, while others may permit it under program rules. Confirm early with your lender, since financing rules can affect your loan amount, down payment, or reserves.
Where you are likely to see it in Jersey City
Jersey City has many properties that clear the $1,000,000 threshold, especially newer and larger riverfront condos, townhomes, and some single‑family homes in Downtown and historic areas. Neighborhoods with amenity‑rich buildings near the PATH or waterfront often include listings at or above this level. Your exposure depends on property type, size, and exact location, so review current listings and recent sales with your agent before you make offers.
Negotiation and contract tips
- Talk about it upfront. If you are touring $1,000,000 plus listings, assume the surcharge applies unless your agent confirms an exemption or a seller concession.
- Decide who pays in writing. Your contract should clearly state whether the buyer, seller, or both will pay the mansion tax. Avoid vague language.
- Use concessions strategically. In competitive situations, sellers may agree to cover part or all of the surcharge through a concession or a price adjustment. In a tight inventory market, buyers are often expected to pay it.
- Watch the threshold. If you are negotiating near $1,000,000, changing price or terms can trigger or remove the surcharge. Run the math on each counterproposal.
Buyer closing checklist
Use this quick list to avoid last‑minute surprises.
- Confirm the threshold and rate for your deal with your title company.
- Verify the line item on your Closing Disclosure or HUD‑1 and who is paying.
- Ask your title or closing attorney who will file the realty transfer documents and when payment is remitted.
- Check with your lender about whether the surcharge can be financed and how it affects your loan terms.
- Coordinate your cash‑to‑close so funds cover the surcharge plus all other closing costs and prepaids.
- Ask your tax advisor whether transfer taxes can be added to your cost basis.
- Keep emails and drafts showing who pays, in case questions arise during funding.
Key exemptions at a glance
Most standard purchases do not qualify for an exemption. Common non‑taxable situations may include transfers between spouses incident to divorce, transfers upon death, certain foreclosure or sheriff’s sale outcomes, and some transfers to or from governmental entities. If you think your situation might qualify, flag it for your title company and attorney. Exemptions are documented and claimed as part of the closing filings, and supporting paperwork is often required.
Bottom line for Jersey City buyers
If you are buying at or above $1,000,000 in Jersey City, plan for a 1% mansion tax on the total consideration. Decide early who will pay, confirm how it appears on your Closing Disclosure, and coordinate with your lender and title company so funding stays smooth. A clear strategy can help you negotiate concessions, protect your budget, and keep your closing on track.
Ready to run the numbers for your specific property and neighborhood timeline? Reach out to The Hudson Essex Collection for local guidance from search to closing.
FAQs
Does NJ’s mansion tax apply to condos and co‑ops in Jersey City?
- Yes, the surcharge generally applies to real property transfers at $1,000,000 or more. Condos are included. Co‑op treatment can vary, so confirm with your title company and attorney.
Who typically pays the mansion tax in New Jersey home sales?
- It is commonly charged to the buyer as a closing cost, but payment is negotiable in the purchase contract and can be split or covered by the seller.
Can I finance the mansion tax into my mortgage in Jersey City?
- Sometimes. It depends on your lender and loan program rules. Ask your lender early so you can plan your cash to close.
Is the NJ mansion tax refundable after closing?
- Generally no. If a transfer closes and the fee is paid, refunds are rare and typically limited to errors verified through the proper process.
How is the surcharge shown on my Closing Disclosure or HUD‑1?
- It appears as a separate line item among closing costs. Your title company or attorney will prepare and file the related documents and remit payment.
Can I avoid the tax by splitting the price or using multiple contracts?
- New Jersey can aggregate related consideration to prevent threshold avoidance. Attempting to split deals can create risk, so consult your attorney before structuring.
Does the mansion tax change my annual property taxes?
- No. It is a one‑time closing cost. It does not directly change your property tax rate, although a higher purchase price can affect assessed value in some systems.
Is the mansion tax deductible on my federal return?
- It is generally not deductible as a current expense, but transfer taxes may increase your property’s cost basis. Confirm treatment with your tax advisor.
