New Jersey Mansion Tax - Once the Buyer's Problem, now the Seller's

The new mansion tax law in New Jersey is already stirring things up.

Up until a few weeks ago, everyone knew their role — seller pays transfer tax, buyer pays mansion tax. But the new law shifts that burden entirely to the seller, and it’s throwing deals off balance.

I’m working on a transaction right now where the seller is trying to contract the mansion tax obligation back onto the buyer. The buyer, of course, wants nothing to do with it. What used to be a non-issue is now a point of contention. And now the whole deal might be off because of this. 

This change may seem straightforward, but in practice it’s causing real friction. Anyone working on contracts for deals over $1 million should take a second look at their tax provisions. Don’t assume the old rules still apply. And be sure to counsel your clients early on regarding this issue.