Gov. Murphy just made it more expensive to sell a home in NJ. Is that a good thing?

Among recent laws signed by Gov. Phil Murphy is a new real estate transfer fee for owners selling the state’s most expensive properties.

Reaction to that increase, which takes effect this month, has been mixed.

Currently, property sales that are $1 million or more are charged a fee of 1% of the total sale price.

The new law imposes a 2% fee on sales over $2 million, with the percentage increasing with each $500,000 in sale price, up to 3.5%, for sales over $3.5 million.

The progressive think tank New Jersey Policy Perspective said the “modest increase” affects just the top 3% of property sales statewide.

“Expanding the fee on high-priced property sales ensures that the state’s wealthiest residents and large corporate landholders, rather than low- and middle-income households, contribute their fair share,” New Jersey Policy Perspective Senior Policy Analyst Peter Chen said in a written statement.

Who pays the new real estate transfer fee in NJ?

New Jersey Realtors CEO Doug Tomson said that shifting the fee from buyer to the seller does “help a lot,” as buyers already are struggling to pull together money for down payments.

Thomson said they worked with the Murphy administration and legislators to modify the new fee, from its initially proposed threshold of $1 million sales.

Once the fee is in effect, if the state sees a negative impact to the high-end housing market, NJ Realtors will ask lawmakers to consider rolling it back, Tomson said.

Chen said the new high-end realty transfer fee is impacting a small number of buyers who are OK paying slightly higher interest rates.

New realty transfer fee will generate millions for NJ

Revenue raised by the increased fee on the state’s most expensive properties tool will be about $250 million to support state programs, Chen said.

That is important because New Jersey is running a structural deficit, meaning “we do not have enough in revenue to cover our expenses," he said.

When does the new transfer fee take effect?

The increased realty transfer fee for New Jersey’s $2 million properties takes effect July 10, but some sales still face an exception.

If a home or property sale is under contract before July 10 and closes by November 15th, a seller would be eligible for a rebate from the state of NJ on the difference, Tomson said.

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