How Evolving Mansion Tax Laws Reshape Relocation Programs
So called “mansion taxes” have been around for many years. These additional taxes do not apply only to “mansions” but are charged on the sales of many types of real property in excess of specific price points. The tax rates and price points vary by location but the most common version impacting relocation sales is in New Jersey.
Since 2004, New Jersey has charged a 1% “mansion tax” on the sale price of residential (and some commercial) properties over $1,000,000. This tax has historically been a buyer’s expense charged at closing.
New Jersey’s A-5804/S-4666 Amendment: Key changes to the Mansion Tax Law was signed on June 30, 2025, and applied to closings after July 10th, which changed the rules for New Jersey transactions.
Importantly, new rules shift responsibility for the tax from the buyer to the seller and institute a tiered fee structure based on sale price.
These fees, now labeled as a “Supplemental Realty Transfer Fee”, are still collected at closing and submitted with the deed to be recorded.
One real estate industry group estimated that the increased tax will apply to only the top 3 percent of property sales in New Jersey. However, the move from buyer to seller responsibility can significantly impact costs for home sale transactions.
Relocation policies that include home sale programs, such as a Guaranteed Buyout or Buyer Value Option benefit, must now include the mansion tax as part of the company covered standard seller closing costs. This increases home sale costs for high value properties in New Jersey. For example, a $1,450,000 sale would incur a mansion tax of $14,500 at closing.
Conversely, companies that currently reimburse the mansion tax for buyers purchasing a new home in the state may recognize savings on the transaction in both tax and in gross-up on the tax reimbursement. An analysis of relocation activity into and out of New Jersey will help identify the financial impact on program costs.
Compliant home sale programs must occur via a “two-step” transaction; however, the mechanics of filing one or two deeds is usually a client decision. New Jersey does not require two deeds for relocation transactions and, when feasible, NEI recommends recording a single deed directly from the employee to the outside buyer. For companies that mandate two separate deeds - one from the employee to the relocation management company (RMC) and from the RMC to the buyer - the tax obligation will double. The costs of the first deed are taxable income to the employee, thus the gross up on those expenses adds even more cost.
Although New Jersey has had a mansion tax for two decades, the topic is gaining traction in other markets. NAR data indicates there are mansion taxes in place in cities or counties in seven states and Washington, D.C. and ballot initiatives have been put forward in cities like Chicago (failed) and Los Angeles (passed).
The newly graduated schedule for mansion taxes in New Jersey aligns with many other states’ approach. For example, New York’s tax starts at 1% for a $1 million property and escalates to a maximum of 3.9% for a home at $25 million or more. Washington state’s tax extends up to 3% for properties over $3,025,000. The tax is a seller cost in Washington; negotiable between buyer and seller in other markets.
California does not have a state mansion tax, but individual cities have adopted the approach with the revenue often supporting affordable housing, mass transit systems, and other public needs. Los Angeles’ new tax, effective in 2023, starts at 4% for sales over $5 million and goes up to 5.5% if over $10 million.
Connecticut’s mansion tax applies a 2.25% tax rate to the portion of any sale above $2.5 million.
Hawaii has multiple sales price levels that trigger graduated tax rates, starting as low as 0.1% for a sale price under $600,000 and can go as high as 10-20% for properties over $5.49 million. The rate in Hawaii is also driven by whether the property is considered a primary residence.
Many corporate policies include a value limit on homes that are eligible for the home sale program, allowing for an analysis of the cost and risk for properties over those limits. When exception requests arise based on those policy parameters, the mansion tax topic should be included in that analysis.
The expansion of mansion tax laws—especially New Jersey’s recent shift in responsibility from buyer to seller and the introduction of tiered rates—adds a new layer of complexity and cost to corporate relocation programs. With similar taxes already in effect or under consideration in other states and cities, it’s important for companies to understand how these changes may affect both inbound and outbound moves, home sale / purchase costs, and policy exceptions.
NEI is here to help analyze your program’s exposure, assess potential financial impact, and ensure compliance with evolving requirements. For tailored guidance on how these changes may affect your mobility program, please reach out to your NEI representative.
How Evolving Mansion Tax Laws Reshape Relocation Programs
So called “mansion taxes” have been around for many years. These additional taxes do not apply only to “mansions” but are charged on the sales of many types of real property in excess of specific price points. The tax rates and price points vary by location but the most common version impacting relocation sales is in New Jersey.
Since 2004, New Jersey has charged a 1% “mansion tax” on the sale price of residential (and some commercial) properties over $1,000,000. This tax has historically been a buyer’s expense charged at closing.
New Jersey’s A-5804/S-4666 Amendment: Key changes to the Mansion Tax Law was signed on June 30, 2025, and applied to closings after July 10th, which changed the rules for New Jersey transactions.
Importantly, new rules shift responsibility for the tax from the buyer to the seller and institute a tiered fee structure based on sale price.
These fees, now labeled as a “Supplemental Realty Transfer Fee”, are still collected at closing and submitted with the deed to be recorded.
One real estate industry group estimated that the increased tax will apply to only the top 3 percent of property sales in New Jersey. However, the move from buyer to seller responsibility can significantly impact costs for home sale transactions.
Relocation policies that include home sale programs, such as a Guaranteed Buyout or Buyer Value Option benefit, must now include the mansion tax as part of the company covered standard seller closing costs. This increases home sale costs for high value properties in New Jersey. For example, a $1,450,000 sale would incur a mansion tax of $14,500 at closing.
Conversely, companies that currently reimburse the mansion tax for buyers purchasing a new home in the state may recognize savings on the transaction in both tax and in gross-up on the tax reimbursement. An analysis of relocation activity into and out of New Jersey will help identify the financial impact on program costs.
Compliant home sale programs must occur via a “two-step” transaction; however, the mechanics of filing one or two deeds is usually a client decision. New Jersey does not require two deeds for relocation transactions and, when feasible, NEI recommends recording a single deed directly from the employee to the outside buyer. For companies that mandate two separate deeds - one from the employee to the relocation management company (RMC) and from the RMC to the buyer - the tax obligation will double. The costs of the first deed are taxable income to the employee, thus the gross up on those expenses adds even more cost.
Although New Jersey has had a mansion tax for two decades, the topic is gaining traction in other markets. NAR data indicates there are mansion taxes in place in cities or counties in seven states and Washington, D.C. and ballot initiatives have been put forward in cities like Chicago (failed) and Los Angeles (passed).
The newly graduated schedule for mansion taxes in New Jersey aligns with many other states’ approach. For example, New York’s tax starts at 1% for a $1 million property and escalates to a maximum of 3.9% for a home at $25 million or more. Washington state’s tax extends up to 3% for properties over $3,025,000. The tax is a seller cost in Washington; negotiable between buyer and seller in other markets.
California does not have a state mansion tax, but individual cities have adopted the approach with the revenue often supporting affordable housing, mass transit systems, and other public needs. Los Angeles’ new tax, effective in 2023, starts at 4% for sales over $5 million and goes up to 5.5% if over $10 million.
Connecticut’s mansion tax applies a 2.25% tax rate to the portion of any sale above $2.5 million.
Hawaii has multiple sales price levels that trigger graduated tax rates, starting as low as 0.1% for a sale price under $600,000 and can go as high as 10-20% for properties over $5.49 million. The rate in Hawaii is also driven by whether the property is considered a primary residence.
Many corporate policies include a value limit on homes that are eligible for the home sale program, allowing for an analysis of the cost and risk for properties over those limits. When exception requests arise based on those policy parameters, the mansion tax topic should be included in that analysis.
The expansion of mansion tax laws—especially New Jersey’s recent shift in responsibility from buyer to seller and the introduction of tiered rates—adds a new layer of complexity and cost to corporate relocation programs. With similar taxes already in effect or under consideration in other states and cities, it’s important for companies to understand how these changes may affect both inbound and outbound moves, home sale / purchase costs, and policy exceptions.
NEI is here to help analyze your program’s exposure, assess potential financial impact, and ensure compliance with evolving requirements. For tailored guidance on how these changes may affect your mobility program, please reach out to your NEI representative.
How Evolving Mansion Tax Laws Reshape Relocation Programs
So called “mansion taxes” have been around for many years. These additional taxes do not apply only to “mansions” but are charged on the sales of many types of real property in excess of specific price points. The tax rates and price points vary by location but the most common version impacting relocation sales is in New Jersey.
Since 2004, New Jersey has charged a 1% “mansion tax” on the sale price of residential (and some commercial) properties over $1,000,000. This tax has historically been a buyer’s expense charged at closing.
New Jersey’s A-5804/S-4666 Amendment: Key changes to the Mansion Tax Law was signed on June 30, 2025, and applied to closings after July 10th, which changed the rules for New Jersey transactions.
Importantly, new rules shift responsibility for the tax from the buyer to the seller and institute a tiered fee structure based on sale price.
These fees, now labeled as a “Supplemental Realty Transfer Fee”, are still collected at closing and submitted with the deed to be recorded.
One real estate industry group estimated that the increased tax will apply to only the top 3 percent of property sales in New Jersey. However, the move from buyer to seller responsibility can significantly impact costs for home sale transactions.
Relocation policies that include home sale programs, such as a Guaranteed Buyout or Buyer Value Option benefit, must now include the mansion tax as part of the company covered standard seller closing costs. This increases home sale costs for high value properties in New Jersey. For example, a $1,450,000 sale would incur a mansion tax of $14,500 at closing.
Conversely, companies that currently reimburse the mansion tax for buyers purchasing a new home in the state may recognize savings on the transaction in both tax and in gross-up on the tax reimbursement. An analysis of relocation activity into and out of New Jersey will help identify the financial impact on program costs.
Compliant home sale programs must occur via a “two-step” transaction; however, the mechanics of filing one or two deeds is usually a client decision. New Jersey does not require two deeds for relocation transactions and, when feasible, NEI recommends recording a single deed directly from the employee to the outside buyer. For companies that mandate two separate deeds - one from the employee to the relocation management company (RMC) and from the RMC to the buyer - the tax obligation will double. The costs of the first deed are taxable income to the employee, thus the gross up on those expenses adds even more cost.
Although New Jersey has had a mansion tax for two decades, the topic is gaining traction in other markets. NAR data indicates there are mansion taxes in place in cities or counties in seven states and Washington, D.C. and ballot initiatives have been put forward in cities like Chicago (failed) and Los Angeles (passed).
The newly graduated schedule for mansion taxes in New Jersey aligns with many other states’ approach. For example, New York’s tax starts at 1% for a $1 million property and escalates to a maximum of 3.9% for a home at $25 million or more. Washington state’s tax extends up to 3% for properties over $3,025,000. The tax is a seller cost in Washington; negotiable between buyer and seller in other markets.
California does not have a state mansion tax, but individual cities have adopted the approach with the revenue often supporting affordable housing, mass transit systems, and other public needs. Los Angeles’ new tax, effective in 2023, starts at 4% for sales over $5 million and goes up to 5.5% if over $10 million.
Connecticut’s mansion tax applies a 2.25% tax rate to the portion of any sale above $2.5 million.
Hawaii has multiple sales price levels that trigger graduated tax rates, starting as low as 0.1% for a sale price under $600,000 and can go as high as 10-20% for properties over $5.49 million. The rate in Hawaii is also driven by whether the property is considered a primary residence.
Many corporate policies include a value limit on homes that are eligible for the home sale program, allowing for an analysis of the cost and risk for properties over those limits. When exception requests arise based on those policy parameters, the mansion tax topic should be included in that analysis.
The expansion of mansion tax laws—especially New Jersey’s recent shift in responsibility from buyer to seller and the introduction of tiered rates—adds a new layer of complexity and cost to corporate relocation programs. With similar taxes already in effect or under consideration in other states and cities, it’s important for companies to understand how these changes may affect both inbound and outbound moves, home sale / purchase costs, and policy exceptions.
NEI is here to help analyze your program’s exposure, assess potential financial impact, and ensure compliance with evolving requirements. For tailored guidance on how these changes may affect your mobility program, please reach out to your NEI representative.
