Shopping in Hoboken at or near the seven-figure mark? One small line item can surprise first-time luxury buyers: New Jersey’s “mansion tax.” If you plan to buy a condo or townhome around $1,000,000, understanding when this 1% charge kicks in, who pays it, and how it shows up at closing will help you budget with confidence. In this guide, you’ll learn the basics, see practical examples, and get a checklist to keep your purchase on track. Let’s dive in.
NJ mansion tax in plain English
New Jersey imposes an additional transfer tax, often called the “mansion tax,” when the consideration for a residential property transfer equals or exceeds $1,000,000. The tax equals 1% of the total consideration. It is separate from the state’s standard Realty Transfer Fee, which still applies under its own schedule.
For Hoboken buyers, this comes up often because many condos and townhomes list in price bands near the $1,000,000 threshold.
What this means in Hoboken
The 1% surcharge applies to residential properties transferred by deed, including:
- Condominium units
- Townhomes and fee-simple single-family homes
Co-ops are uncommon in Hoboken, and their treatment can differ since co-ops often involve shares rather than a deed. If you are evaluating a non-standard structure, ask your attorney and title company to confirm treatment.
If several parcels or units are bundled under one deed, the combined price can trigger the 1% even if each unit alone is below the threshold. Structure matters, so confirm with your closing team early.
How the tax is calculated
The mansion tax equals 1% of the total consideration for the transfer. Simple examples:
- $1,000,000 purchase price → $10,000 mansion tax
- $1,100,000 purchase price → $11,000 mansion tax
- $999,999 purchase price → generally no mansion tax unless other consideration pushes the total to $1,000,000 or more
What counts as “consideration”
Consideration generally includes:
- The cash you pay at closing
- Any assumed or taken subject-to mortgage
- Other items the state counts as part of total consideration
Seller credits typically do not reduce the reported sale price if the contract states a gross price. The way your title company and attorney record the transaction controls the tax calculation, so get confirmation in writing.
When and how it is paid
The mansion tax is paid at settlement when the deed is recorded. It is not typically collected at contract signing unless the parties agree otherwise. Practically, your closing statement will list the 1% line item, and you must have the funds available.
The standard New Jersey Realty Transfer Fee still applies. The 1% surcharge is an additional amount, and the settlement agent will compute both.
Who pays in Hoboken
There is no automatic rule that the buyer must pay or that the seller must pay. Responsibility for the mansion tax is a contract term and is negotiable. In multiple-offer situations, sellers may require buyers to pay. In a more buyer-friendly market, sellers may agree to pay or split the cost.
Common approaches you may see in a contract include:
- “Buyer to pay New Jersey transfer taxes, including any mansion tax.”
- “Seller to pay all New Jersey transfer taxes, including mansion tax.”
- “Buyer and seller to split New Jersey transfer taxes.”
Because 1% is material at this price point, be sure the contract is explicit so you can plan your cash-to-close accurately.
Budgeting checklist for Hoboken buyers
Use this quick checklist to avoid surprises:
- Confirm your expected purchase price relative to the $1,000,000 threshold early.
- Ask your agent and attorney how transfer taxes will be allocated in the contract, and insist on explicit language.
- Budget for the 1% surcharge if the total consideration is $1,000,000 or more.
- If you are financing, make sure your lender’s loan estimate and your settlement statement include the 1% where applicable.
- Ask your title company or attorney to confirm in writing:
- What the state will count as consideration for your specific deal.
- Whether any statutory exemptions apply based on your facts.
- The total of all transfer-related fees, including the standard Realty Transfer Fee and the 1% surcharge.
- Confirm your final cash-to-close and wire plan at least several days before settlement.
Examples near the threshold
If you are shopping close to $1,000,000, small changes can have big effects:
- Exactly $1,000,000: Triggers the 1% charge, so plan on $10,000 at closing (subject to who pays in your contract).
- $999,999: Generally does not trigger the 1%, unless other consideration pushes the total to $1,000,000 or more.
- $1,050,000: Triggers the 1% for $10,500.
Remember, seller credits usually do not reduce the reported sale price for tax purposes. Always confirm how the settlement will be recorded.
Timing and paperwork
- The mansion tax is imposed at the time of transfer and paid at closing.
- It is listed on your closing statement, and the settlement agent collects and remits it.
- If your transaction involves unusual elements, like an assumed mortgage or multiple parcels, loop in your attorney and title company early to avoid last-minute changes.
Strategy tips for buyers
- Get clarity early. Ask your agent to check with the listing side about transfer tax allocation expectations before you draft an offer.
- Put it in writing. Your attorney should include clear contract language about who pays the mansion tax.
- Align the team. Make sure your lender, title company, and attorney are using the same assumptions in their estimates.
- Plan cash-to-close. If you are expected to pay the 1%, include it in your funds-to-close plan to avoid wire changes on closing day.
Why it matters in Hoboken
Price points in Hoboken often cluster around the $1,000,000 mark, especially for modern condos and well-located townhomes. That makes the mansion tax a routine part of many transactions. When you account for it upfront, you can make cleaner offers, avoid last-minute renegotiation, and close with less stress.
Local guidance you can trust
Buying near or above $1,000,000 in Hoboken should feel exciting, not confusing. Our team pairs local market expertise with a concierge process that keeps your transaction organized and transparent. If you are weighing options near the threshold, we will coordinate with your attorney, lender, and title company so you understand your numbers before you sign.
Ready to talk strategy for your Hoboken purchase? Connect with Mumoli Real Estate Inc. for clear guidance and a smooth path to closing.
FAQs
What is the New Jersey mansion tax for Hoboken buyers?
- It is a 1% surcharge on residential property transfers when total consideration equals or exceeds $1,000,000, paid in addition to the standard Realty Transfer Fee.
Does the 1% apply at exactly $1,000,000 in Hoboken?
- Yes. At $1,000,000, the 1% is triggered, which equals $10,000 on a $1,000,000 purchase.
Do seller credits lower the mansion tax amount?
- Generally no. The tax is based on the consideration as recorded; credits usually do not reduce the gross price used for calculation. Confirm with your attorney and title company.
When is the mansion tax paid in New Jersey?
- It is paid at settlement when the deed is recorded. It is not typically collected at contract signing unless the parties agree otherwise.
Is New Jersey’s mansion tax the same as New York City’s?
- They are similar in concept but separate. If you buy in Hoboken, you follow New Jersey’s rules, not NYC’s.
Who usually pays the mansion tax in Hoboken deals?
- It is negotiable. The contract controls whether the buyer, seller, or both split the 1% surcharge.
