New Jersey Realtors Calls For Graduated Percent Fee Relief

New Jersey Realtors, which represents more than 53,000 Realtors in the state, is calling for relief from New Jersey’s Graduated Percent Fee on residential housing transactions.

Since its implementation, the group argues the policy has added costs to real estate transactions at a time when housing affordability remains a major concern across the state.

The Graduated Percent Fee took effect this past July as part of changes to New Jersey’s real estate transfer tax structure — replacing the previous 1% “mansion tax” that buyers paid on transactions above $1 million with a tiered fee now paid by the seller.

Under the current structure, properties selling between $1 million and $2 million are subject to a 1% fee, while sales between $2 million and $2.5 million face a 2% fee.

The fee — applying to the entire purchase price — increases to 2.5% for sales between $2.5 million and $3 million, 3% for sales between $3 million and $3.5 million and 3.5% for transactions above $3.5 million.

“The Graduated Percent Fee has proven to be onerous for the New Jersey housing market,” said New Jersey Realtors CEO Doug Tomson. “At a time when affordability remains one of the state’s most pressing challenges, adding additional transaction costs makes it harder for buyers and sellers to participate in the market that so desperately needs participation.”

New Jersey Realtors said the state should consider reducing or reforming the fee as it applies to residential housing.

“We are hopeful Governor (Mikie) Sherrill will use the budget address as an opportunity to speak to the burden this fee places on everyday New Jerseyans,” Tomson sdded. “We cannot tax our way to housing affordability.

“Policies that increase the cost of buying and selling homes ultimately make housing less attainable for the very residents we are trying to help.”

The organization also warned that policies affecting housing transactions can have broader ripple effects across the market.

“The only law we cannot change is the law of unintended consequences, and this policy has already created many,” Tomson said. “When the cost of a transaction rises, it affects buyers and sellers mobility in the housing market, and ultimately housing supply for all price points.”

New Jersey introduced the original mansion tax in 2004 to generate revenue from high-value property sales — and the threshold has remained at $1 million despite significant home price appreciation in many parts of the state.