In New Jersey the seller pays the realty transfer fee and, on sales over $1 million, the graduated "mansion tax"; the buyer pays lender, title, inspection and prepaid costs, plus the down payment.
Who pays closing costs in New Jersey?
Both sides pay their own costs. Under current New Jersey law the seller pays the state realty transfer fee and, on sales over $1,000,000, the graduated percent fee (the "mansion tax"), which since July 10, 2025 runs from 1% to 3.5% of the whole price. The buyer pays lender fees, title insurance, inspections, recording charges and prepaid property taxes and insurance. Your Loan Estimate lists the buyer’s costs.
New Jersey mansion tax in 2026: rates, threshold and who pays
New Jersey’s "mansion tax" is officially the Graduated Percent Fee, a supplement to the realty transfer fee. P.L. 2025, c. 69 changed it in two ways, effective July 10, 2025: the old flat 1% became a graduated rate, and legal responsibility moved from the buyer to the seller. The Division of Taxation applies the new rules to deeds submitted to the county for recording on or after July 10, 2025.
| Sale price (total consideration) | Rate on the whole price | Example |
|---|---|---|
| $1,000,000 or less | None | — |
| Over $1,000,000 up to $2,000,000 | 1% | $1,500,000 → $15,000 |
| Over $2,000,000 up to $2,500,000 | 2% | $2,200,000 → $44,000 |
| Over $2,500,000 up to $3,000,000 | 2.5% | $2,750,000 → $68,750 |
| Over $3,000,000 up to $3,500,000 | 3% | $3,200,000 → $96,000 |
| Over $3,500,000 | 3.5% | $4,000,000 → $140,000 |
- It is not marginal. The rate applies to the entire price. A $2,000,000 sale owes 1% ($20,000), but a sale just over $2,000,000 owes 2% of the whole price (about $40,000). Buyers and sellers near a bracket edge should have their attorneys check the numbers.
- Which property: Class 2 residential, Class 3A farms with a home on them, Class 4A commercial property, and co-op units. An organization exempt under section 501(c)(3) buying the property, and certain merger transfers, are exempt.
- Contracts can shift the cost. The Division of Taxation says that if buyer and seller agree otherwise in their contract, that is a private legal arrangement; the State only needs the fee paid before it will record the deed. Ask your attorney before you sign.
- Before July 10, 2025: the buyer paid a flat 1% on sales over $1,000,000. A contract signed before then could still owe the higher rate, with a refund route for some sellers; that window has closed for deeds recorded after November 15, 2025.
New Jersey realty transfer fee (paid by the seller)
Every New Jersey sale also owes the regular realty transfer fee, collected by the county when the deed is recorded. The Division of Taxation says the seller is statutorily responsible for it. For sales over $350,000 the fee is charged in slices of the price:
| Part of the price | Fee per $500 |
|---|---|
| First $150,000 | $2.90 |
| Over $150,000 up to $200,000 | $4.25 |
| Over $200,000 up to $550,000 | $4.80 |
| Over $550,000 up to $850,000 | $5.30 |
| Over $850,000 up to $1,000,000 | $5.80 |
| Over $1,000,000 | $6.05 |
Smaller sales (up to $350,000) use lower rates: $2.00, $3.35 and $3.90 per $500. Sellers who are qualifying senior citizens (62 or older), blind or disabled, and low- and moderate-income housing get reduced rates, and some transfers are fully exempt, such as between spouses or between parent and child. On a $650,000 sale the fee is $5,715 (see the worked example).
New Jersey closing costs checklist: who usually pays what
The law sets who pays the state transfer fees. Most other items follow custom and your contract, so read this as a starting point, not a rule.
| Cost | Who pays | Notes |
|---|---|---|
| Realty transfer fee | Seller | Seller is legally responsible; collected when the deed is recorded |
| Graduated percent fee ("mansion tax"), over $1 million | Seller | Since deeds submitted on or after July 10, 2025; buyer paid the old 1% fee |
| Smoke alarm compliance certificate | Seller (owner) | Required before sale of a one- or two-family home; obtained from the town |
| Town resale inspection or certificate of occupancy | Varies | Only where the town requires one; rules and fees vary by municipality |
| Payoff of the seller’s mortgage and liens | Seller | Paid from the seller’s proceeds |
| Lender fees (origination, appraisal, credit report) | Buyer | Listed on your Loan Estimate; compare lenders |
| Title insurance (lender’s policy) | Buyer | Required by your lender on a financed purchase; one-time charge at closing |
| Title search, settlement and recording charges | Usually buyer | Shown on the Loan Estimate; some title services can be shopped |
| Home inspection, survey, termite, radon, well or septic tests | Usually buyer | Inspections the buyer orders for its own protection; the contract controls |
| Attorney | Each side | Each party pays the attorney it hires |
| Escrow deposits for property taxes and homeowners insurance | Buyer | Set by the lender; NJ tax deposits can be large |
| Prepaid interest and first-year homeowners (and flood) insurance | Buyer | Flood insurance only if the lender requires it or you choose it |
| Property tax proration | Shared | Adjusted at closing so each side pays for the days it owns the home |
Recording fees for the deed and mortgage are set by law and collected by the county clerk or register of deeds; your settlement agent lists them. Who pays each item can change by contract.
NJ attorney review and title insurance
Attorney review: three business days
If a real estate licensee prepares the contract of sale, New Jersey requires an attorney review clause: the buyer and seller have three business days from delivery of the fully signed contract to consult an attorney, who can propose changes or cancel the contract. Many New Jersey buyers and sellers hire an attorney, and each side pays its own.
Title search and title insurance
Before closing, a title search confirms the seller can transfer clear title, without unpaid liens or judgments. If you finance the purchase, your lender will require you to buy title insurance, a one-time charge at closing. Title charges appear in the "services you can shop for" part of your Loan Estimate, so ask more than one title company for a quote.
Prepaid property taxes, insurance and escrow in New Jersey
New Jersey property taxes are high, so the escrow account is often one of the biggest buyer costs. At closing your lender usually collects a few months of property taxes and homeowners insurance as a starting deposit, plus the first year of insurance and prepaid interest. Property taxes are also prorated between buyer and seller to the closing date.
Look up the tax bill for your town with our NJ property tax calculator. If the home is in a flood zone, the lender will require flood insurance; check the map at FEMA’s Flood Map Service Center.
How to lower closing costs in New Jersey
- Compare Loan Estimates. Lenders must give you a Loan Estimate within three business days of your application. Put two or three side by side with our Loan Estimate comparison tool.
- Ask for a seller credit. A seller can agree to pay part of your closing costs, up to your loan program’s limit.
- Consider a lender credit. A slightly higher rate can come with a credit toward closing costs. Compare the total cost over the years you expect to keep the loan.
- Use down payment assistance. NJHMFA’s assistance can go toward your down payment and closing costs, but not costs customarily paid by the seller. See the NJ first-time home buyer guide.
- Shop title and settlement services where your Loan Estimate says you can.
- Plan your total cash. Our cash to close guide walks through every piece.
Worked example: closing costs on a New Jersey home
Buyer side: $650,000 home with 10% down
The transfer fee figures are New Jersey’s published rates. Lender, title and insurance amounts are assumptions for illustration, not quotes; your Loan Estimate will show your real numbers.
| Down payment (10% of $650,000) | $65,000.00 |
| Loan amount ($650,000 − $65,000) | $585,000.00 |
| NJ realty transfer fee (paid by the seller) | $0.00 |
| Mansion tax (price is not over $1,000,000, and the seller pays it) | $0.00 |
| Lender fees (assumed for illustration) | $6,000.00 |
| Title, settlement, recording and attorney (assumed for illustration) | $5,000.00 |
| Tax escrow deposit: 3 months of an assumed $14,000 annual tax bill | $3,500.00 |
| First-year homeowners insurance (assumed $1,800) | $1,800.00 |
| Estimated cash to close in this example | $81,300.00 |
Seller side: transfer fees at $650,000, $1,000,000 and $1,200,000
| Sale price | Realty transfer fee | Mansion tax | Seller total |
|---|---|---|---|
| $650,000 | $5,715 | $0 | $5,715 |
| $1,000,000 | $9,575 | $0 | $9,575 |
| $1,200,000 | $11,995 | $12,000 (1%) | $23,995 |
$650,000: $150,000 × $2.90/$500 ($870) + $50,000 × $4.25/$500 ($425) + $350,000 × $4.80/$500 ($3,360) + $100,000 × $5.30/$500 ($1,060) = $5,715. At $1,200,000 the same slices plus $300,000 × $5.30, $150,000 × $5.80 and $200,000 × $6.05 per $500 give $11,995, and the mansion tax adds 1% of $1,200,000 ($12,000). Your attorney or title company confirms the exact fees.
Frequently asked questions
Who pays the mansion tax in New Jersey in 2026?
The seller. For deeds submitted for recording on or after July 10, 2025, New Jersey law puts legal responsibility for the realty transfer fee and the graduated percent fee (the "mansion tax") on the seller. Before that, the 1% fee on sales over $1 million was paid by the buyer. A contract can shift who actually pays, but that is a private agreement your attorney should review.
How much is the NJ mansion tax?
It applies when the price is over $1,000,000: 1% up to $2,000,000, 2% up to $2,500,000, 2.5% up to $3,000,000, 3% up to $3,500,000 and 3.5% above $3,500,000. The rate applies to the whole price, not just the part above $1 million, so a $2,750,000 sale owes $68,750.
Does the buyer pay a realty transfer fee in New Jersey?
Not by law. The NJ Division of Taxation says the seller is statutorily responsible for the realty transfer fee and the graduated percent fee. Buyers pay their own costs instead, such as lender fees, title insurance, inspections and prepaid taxes and insurance.
What is the attorney review period in New Jersey?
When a real estate licensee prepares the contract of sale, it must include an attorney review clause. The buyer and seller then have three business days from delivery of the fully signed contract to consult an attorney, who can propose changes or cancel the contract.
Who pays for title insurance in New Jersey?
If you finance the purchase, your lender will require title insurance, and it is a one-time charge paid at closing, normally by the buyer. The premium and related title charges show on your Loan Estimate and Closing Disclosure, so ask for quotes and compare.
How much cash do I need to close on a house in New Jersey?
Your down payment plus your closing costs and prepaid items: lender fees, title and settlement charges, recording fees, and the first deposits for property taxes and insurance. New Jersey property taxes are high, so the tax escrow deposit can be large. Your Loan Estimate shows your estimated cash to close.
Can the seller pay my closing costs in New Jersey?
Often, yes. A seller credit can cover some of your closing costs if your contract includes it and your loan program allows that amount. Lender credits and NJHMFA down payment assistance can also help, but NJHMFA assistance cannot pay costs customarily paid by the seller.
Does New Jersey require a smoke alarm certificate to sell a home?
Yes. The NJ Uniform Fire Code requires a certificate of smoke alarm compliance before a one- or two-family home is sold, leased or changes occupancy. The owner gets it from the town, and it is valid for six months. Some towns also require their own resale inspection or certificate of occupancy.
Sources
Realty transfer fee and graduated percent fee: NJ Division of Taxation, Realty Transfer Fee; Division of Taxation memo on P.L. 2025, c. 69 (July 2, 2025); Clarification on the Graduated Percent Fee (July 9, 2025); Form RTF-1EE; RTF FAQs. Attorney review and title insurance: NJ Department of Banking and Insurance home buying guide. Smoke alarm certificate: NJ Department of Community Affairs. Flood maps: FEMA. Loan documents: CFPB Loan Estimate and Closing Disclosure.
Educational information only, not legal, tax or financial advice, and not an offer to lend. LoanFight is not a lender, law firm or title company. Fees and rules change; confirm with your attorney and title company.
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