G
iulia Carbonaro is a Newsweek reporter based in London, U.K. Her focus includes the U.S. economy, housing market, property insurance market, and local and national politics. She has previously covered U.S. and European politics extensively.

    An amendment to New Jersey's "Mansion Tax" is set to take effect soon, shifting the burden of a 1 percent tax on properties over $1 million from buyers to sellers. The new law, Assembly Bill 5804, introduces progressive rates for sales above $2 million. Sellers will face fees ranging from 2 to 3.5 percent, depending on the sale price.

    The tax hike aims to generate revenue for New Jersey's state budget and is expected to raise $282 million this fiscal year. However, real estate professionals warn that it may hurt the already-struggling housing market and exacerbate the shortage of homes in the state.

    Under the new law, properties sold between $1 million and $2 million will remain subject to a 1 percent fee. Sellers of properties over $2 million but below $3.5 million will face a 2 percent fee, while those selling properties above $3.5 million will pay up to 3.5 percent.

    The tax hike is expected to affect only the top 3 percent of property sales in New Jersey and may lead sellers to reduce their asking prices or hold back listings. The new legislation takes effect on July 10.