New Jersey Graduated Percent Fee: What South Jersey Sellers Need to Know in 2026

If you own a home in South Jersey valued at $1 million or more — whether it is an oceanfront property in Margate, a bayfront home in Longport, a newly constructed luxury home in Galloway, a waterfront property in Somers Point, or a premium home in Linwood or Northfield — there is a significant change in New Jersey's closing costs that went into effect last year that you need to understand before you list your home.

As of July 10, 2025, New Jersey replaced the old 1% "mansion tax" — which was paid by the buyer on sales over $1 million — with a new Graduated Percent Fee paid entirely by the seller. The rates increase with the sale price, meaning the higher your sale price, the larger the fee you will pay at closing.

This guide is for homeowners in Atlantic County, Cape May County, and throughout South Jersey who own property valued at $1 million or more. Whether you are selling a primary residence, a second home at the shore, an investment property, or a newly built luxury home, here is what the Graduated Percent Fee means for your bottom line.

What Changed and When

On July 10, 2025, Governor Murphy signed the FY 2026 budget bill (N.J. S5000/A4666), which eliminated the old "mansion tax" and replaced it with the Graduated Percent Fee. The change was significant not just in rate structure but in who pays.

The Old System

Before July 10, 2025, New Jersey imposed a flat 1% fee on the portion of a property's sale price above $1 million. This fee was paid by the BUYER. In practice, this meant that buyers purchasing a home for $1.2 million in Margate would owe an additional $2,000 at closing (1% of the $200,000 above $1 million), on top of standard closing costs and the state's regular Realty Transfer Fee.

The New Graduated Percent Fee

The Graduated Percent Fee is paid by the SELLER. It applies to the full sale price for properties sold at $1 million or more. The rates increase in tiers:

The fee is calculated on the full sale price, not just the portion above $1 million. A home selling for $1.5 million would owe 1% of $1.5 million = $15,000. A home selling for $2.2 million would owe 2% of $2.2 million = $44,000.

How the Graduated Percent Fee Works With the Standard Realty Transfer Fee

Here is an important point that often catches sellers off guard: the Graduated Percent Fee is in addition to New Jersey's standard Realty Transfer Fee, which still applies to the full sale price of every property. You do not get to choose one or the other — both fees are due at closing.

The standard Realty Transfer Fee is calculated at a rate of $0.35 to $3.35 per $500 of the sale price, depending on the price tier. For a $1.5 million home sale, the standard Realty Transfer Fee alone is roughly $5,850. On top of that, the new Graduated Percent Fee adds $15,000. Combined, the seller is looking at approximately $20,850 in state transfer fees before any municipal taxes, attorney fees, commission, or other closing costs.

For sellers at higher price points, the combined fees can be substantial. A $3 million home sale would trigger roughly $14,700 in standard Realty Transfer Fees and $75,000 in Graduated Percent Fees (at 2.5%), totaling nearly $90,000 in state transfer fees alone.

Example: Selling a $1.2 Million Property

Let's look at a realistic South Jersey scenario. You own a well-maintained single-family home in Linwood or a bayfront condo in Somers Point valued at $1.2 million. Here is how the fees break down for the seller at closing:

• Sale price: $1,200,000
• Standard Realty Transfer Fee: ~$4,575
• Graduated Percent Fee (1%): $12,000
• Total state transfer fees: ~$16,575

Under the old system, the buyer would have paid 1% on the $200,000 above $1 million ($2,000), and the seller would have paid only the standard Realty Transfer Fee of ~$4,575. The new system shifts an additional $12,000 from the buyer to the seller.

Example: Selling a $2.5 Million Shore Property

Now consider a higher-value scenario — an oceanfront home in Margate or Longport selling for $2.5 million:

• Sale price: $2,500,000
• Standard Realty Transfer Fee: ~$12,530
• Graduated Percent Fee (2%): $50,000
• Total state transfer fees: ~$62,530

Who Is Affected in South Jersey

The Graduated Percent Fee affects sellers in every New Jersey county where home values reach or exceed $1 million. In South Jersey, that includes a growing number of homeowners.

Atlantic County

Atlantic County's waterfront communities — Margate, Longport, Ventnor, Brigantine, and select areas of Somers Point and Linwood — have significant inventory in the $1 million-plus range. Oceanfront and bayfront properties in these towns routinely exceed the $1 million threshold, especially for newer construction, larger lots, and properties with deep-water dock access. Luxury new construction in Galloway and Egg Harbor Township is also increasingly hitting the $1 million mark. As the median home price in Atlantic County has climbed to $445,000 (March 2026), the upper end of the market has expanded, meaning more sellers than ever are affected by this fee.

Cape May County

Cape May County has the highest concentration of $1 million-plus properties in South Jersey. Ocean City, Avalon, Stone Harbor, Cape May, Wildwood Crest, Sea Isle City, and the Wildwoods all have substantial inventory above $1 million, especially for oceanfront and bayfront homes. With the county-wide median home sale price reaching $694,000 in May 2026, and oceanfront properties regularly selling for $1.5 million to $5 million or more, the Graduated Percent Fee is a significant factor in nearly every premium transaction in Cape May County.

Cumberland, Ocean, Burlington, and Camden Counties

While these counties have fewer $1 million-plus transactions, the fee still applies to premium waterfront properties, horse farms, estate homes, and large-acreage properties in areas like Greenwich, Upper Township, and select neighborhoods in Moorestown, Medford, and Haddonfield. If you are selling a property at $1 million or more in any New Jersey county, the fee applies the same way.

Why New Jersey Made This Change

The Graduated Percent Fee was adopted as part of New Jersey's FY 2026 budget to generate additional revenue for the state. By shifting the fee from buyer to seller and making it graduated rather than flat, the state projected higher revenue from luxury real estate transactions.

The policy rationale was twofold: first, moving the fee to the seller aligns with the structure of the existing Realty Transfer Fee (which is also seller-paid), making the collection process more consistent. Second, the graduated rate structure generates more revenue from the highest-value transactions — a home selling for $4 million pays a substantially higher effective rate at 3.5% than the old flat 1% on the amount over $1 million.

Regardless of the policy rationale, the practical effect for South Jersey sellers is clear: if you are selling a home valued at $1 million or more, you should factor this cost into your net proceeds calculation from the start.

What This Means for South Jersey Sellers

If you own a home valued at $1 million or more in South Jersey, here is how the Graduated Percent Fee affects your decision to sell:

Your Net Proceeds Will Be Lower Than Under the Old System

The seller is now responsible for a fee that used to fall on the buyer. For most $1 million-plus transactions, this means a difference of $10,000 to $50,000 or more in seller-paid fees compared to the pre-2025 rules. Sellers should be aware of this when setting their price expectations and budgeting for closing costs.

Buyers May Have More Purchasing Power

Since buyers no longer pay the 1% mansion tax, their closing costs on a $1 million-plus purchase are lower than they were before 2025. For a $1.5 million purchase, that means the buyer saves about $5,000 in state fees compared to the old system. This could make the market more accessible to buyers shopping in the $1 million to $2 million range.

Pricing and Marketing Should Account for the Fee

The best way to handle the Graduated Percent Fee in a listing is to price competitively and market aggressively. Properties that are priced right and marketed well still attract strong offers in today's South Jersey market, even after accounting for the seller's higher closing costs. The key is to know your net number early — before you list — so you can make informed decisions about pricing, offers, and negotiations.

Frequently Asked Questions About the Graduated Percent Fee

Does the Graduated Percent Fee apply to every sale over $1 million?

Yes. The fee applies to all real estate sales in New Jersey where the consideration (sale price) is $1 million or more. This includes single-family homes, condominiums, townhouses, multi-family properties, commercial properties, and vacant land. There are no broad exemptions for residential properties.

Can the seller negotiate with the buyer to share the fee?

The Graduated Percent Fee is statutorily the seller's obligation, but like any closing cost, the parties can negotiate who pays it as part of the overall transaction. In practice, a seller might offer a credit at closing or adjust the sale price to account for the fee. However, the fee is collected at closing based on the recorded sale price, and any negotiated arrangement should be clearly documented in the contract of sale.

Does the Graduated Percent Fee apply to estate sales or inherited properties?

Yes, the Graduated Percent Fee applies to any sale where the sale price exceeds $1 million, including estate sales, probate sales, and sales of inherited property. The executor or administrator of the estate is responsible for ensuring the fee is paid from the proceeds of the sale.

Does the fee apply to new construction sales?

Yes, the Graduated Percent Fee applies to sales of newly constructed homes that sell for $1 million or more. The builder or developer selling the property would owe the fee at closing.

Is the fee tax deductible?

The Graduated Percent Fee is a state transfer tax, not a property tax. It may be treated as a selling expense and used to reduce your capital gains calculation for federal tax purposes. However, you should consult with a qualified tax professional or CPA for advice specific to your situation.

How do I estimate my total closing costs as a seller?

Your total seller closing costs in New Jersey typically include the Realty Transfer Fee, the Graduated Percent Fee (if applicable), your agent's commission, attorney fees, municipal lien searches, recording fees, prorated property taxes, and any negotiated buyer credits. A good Realtor can provide you with a detailed net proceeds estimate before you list your home so there are no surprises at closing.