Buyers purchasing homes over one million dollars should know about the mansion tax. Sellers should understand what the tax means for potential buyers and price homes accordingly if the comps are right on par with pricing. Price right, sell quickly and attract buyers.

What home buyers and sellers need to know about the mansion tax in New Jersey.

Home buyers and sellers should know about the Mansion Tax here in New Jersey. This tax was imposed 2004 and states that any residential property sold over $1 million dollars is subject to a 1% tax paid by a buyer. While it only applies to residential sales above $1 million, it is levied on the full purchase price, meaning a buyer who pays $999,999 for a house, condo or coop would owe NO mansion tax, while someone who buys the same property for $1,000,000 would have to pay 1% equaling $10,000.

What does that mean for sellers? For most sellers I represent, who have sale comps that are hovering the line of $900,000 – $1,000,000 million dollars, we run the numbers for potential buyers and get very precise on how much the seller can expect to see at closing after my commission, marketing and staging fees. That may make the difference for a seller to price a property just under the $1,000,000 vs over.

Also a great note to remember, showing up in home searches across the internet. For homes that fluctuate in this price point (this post obviously excludes multimillion dollar homes because in that case it’s a given the homes value is what it is). Buyers may be preapproved for $100,000 more than what they comfortably willing to spend and will set their searches to their “comfort” price. As Realtors ©, we understand that and will sometimes show them homes that are slightly above a buyers “comfort” price point, but usually will tailor our searches to their preferred budget.

Downtown Jersey City saw a reduction in $1 million dollar plus sales of condos after the tax reassessment of 2019 as the new taxes did create some issues for potential buyers, but it goes without saying that single family homes and large 3+ bedroom condominiums in Downtown Jersey City have kept their values, especially with upgrades and renovations. There is a steady stream of demand for those homes and very little supply. After all, there are no new brownstones or row homes, so the historic aspect of them combined with renovations to fit modern lifestyles are still, highly sought after.

The last handful of years, I have focused on selling homes in Jersey City and Hoboken, while moving those sellers into buying homes in Montclair, Glen Ridge, Essex Fells, Closter, Maplewood, South Orange, Chatham & Madison NJ. They equity built up in the Jersey City & Hoboken areas has created situations for sellers where they can afford a larger home on a larger lot in suburban areas of the state. We also help buyers use their equity to help them purchase built to suit homes now, to meet all their multi-generational needs as growing families.

If you would like to learn more about buying, selling or our built-to-suit programs. Call Michelle Mumoli 917.268.8916.