S
elling a home in New Jersey? Be prepared for a hefty fee if it sells for over $2 million. A new law, signed by Governor Phil Murphy on June 30, imposes tens of thousands of dollars in additional fees on high-end property sales. The same tax hike applies to commercial properties.

    The legislation aims to generate revenue for the state's $58.8 billion budget, which began on July 1. Supporters see it as a progressive way to fund essential programs, but critics argue that the revenue won't be dedicated to affordable housing and will harm the already struggling commercial real estate market.

    Here are the key changes to New Jersey's Realty Transfer Fee:

    * The fee rate increases for sales above $2 million:

     * 2% on sales between $2 million and $2.5 million

     * 3% on sales between $2.5 million and $3.5 million

     * 3.5% on sales over $3.5 million

    * Sellers, not buyers, will pay the fee

    The new fees are expected to raise $282 million this fiscal year, according to Senator Paul Sarlo. The law takes effect on July 10.

    Governor Murphy says the tax hike is necessary to close the gap between state revenues and expenditures. Even with the new taxes, a structural deficit of $1.5 billion is projected for the next year.

    The impact will be limited, affecting only the top 3% of property sales in New Jersey, according to Peter Chen, senior policy analyst at New Jersey Policy Perspective. The median sale price for single-family homes sold in the state was $573,000 in the 12 months ended in May.

    Commercial real estate groups are concerned that the tax will further depress an already struggling market, which has been affected by remote work since the pandemic.