Owner guide
Selling a Commercial Building in NJ: The Seller-Paid Graduated Fee
Since July 10, 2025, New Jersey charges the seller a fee of 1% to 3.5% of the whole price on most Class 4A commercial sales over $1 million. Here is how it works, where the price cliffs are, and what to check before you list.
What changed in 2025
P.L. 2025, c. 69, signed June 30, 2025, replaced the old 1% fee that buyers paid on deeds over $1 million with a graduated fee, and put the legal responsibility for it on the seller. It applies to transfers on or after July 10, 2025. P.L. 2025, c. 69
The fee is in addition to the regular realty transfer fee, which the seller also pays on every deed unless an exemption applies. NJ Division of Taxation, Realty Transfer Fee
The rates
The rate applies to the entire consideration in the deed, not just the part over $1 million:
Over $1,000,000 up to $2,000,000: 1%
Over $2,000,000 up to $2,500,000: 2%
Over $2,500,000 up to $3,000,000: 2.5%
Over $3,000,000 up to $3,500,000: 3%
Over $3,500,000: 3.5%
Source: Division of Taxation, Graduated Percent Fee notice.
What it costs at common prices
$1,000,000 sale: no graduated fee.
$1,500,000 sale: 1% = $15,000.
$2,000,000 sale: 1% = $20,000.
$2,500,000 sale: 2% = $50,000.
$3,000,000 sale: 2.5% = $75,000.
$3,500,000 sale: 3% = $105,000.
$4,000,000 sale: 3.5% = $140,000.
$5,000,000 sale: 3.5% = $175,000.
These are the graduated fee only. The regular realty transfer fee is on top, at the rates on the Division’s rate schedule.
The price cliffs
Because each rate applies to the whole price, a small step over a threshold can cost more than it brings in:
At $2,000,000 the fee is 1% and you keep $1,980,000 after this fee. One dollar more and the fee jumps to 2% of the whole price, $40,000. You need about $2,020,408 to keep the same amount.
At $2,500,000 the fee is 2% and you keep $2,450,000 after this fee. One dollar more and the fee jumps to 2.5% of the whole price, $62,500. You need about $2,512,821 to keep the same amount.
At $3,000,000 the fee is 2.5% and you keep $2,925,000 after this fee. One dollar more and the fee jumps to 3% of the whole price, $90,000. You need about $3,015,464 to keep the same amount.
At $3,500,000 the fee is 3% and you keep $3,395,000 after this fee. One dollar more and the fee jumps to 3.5% of the whole price, $122,500. You need about $3,518,135 to keep the same amount.
When an offer lands just over a threshold, compare your net, not the headline price.
Which buildings it applies to
The fee applies to deeds for property listed on the tax list as Class 2 (one to four family homes), Class 3A farm property with a residence, Class 4A commercial (other than industrial or apartments), and Class 4C cooperative units. The county recording office does not collect it on other classes, so a building listed as Class 4B industrial is not subject to it. Division of Taxation
Class 4A is the catch-all. A mixed-use building with commercial units plus apartments or industrial space is listed as 4A unless it is solely industrial or solely apartments. So a building that mixes industrial space with other commercial use is 4A, not 4B. If you believe most of a mixed-use property is industrial or apartment use, the Division says you can pay and then file a refund claim, and staff will inspect to decide the predominant use.
Check your class before you list
The assessor cannot change the tax list after it is filed with the county board. If you ask for a class change mid-year after your town’s appeal deadline, you pay the fee and then file for a refund. If you raise it before the deadline, the assessor can review it, and you can appeal the class to the county board if needed. Refund claims must be filed within 90 days of paying the fee. Division of Taxation
The 2027 appeal deadline is April 1, 2027 in most towns. See our commercial property tax appeal guide.
Selling the LLC instead of the deed
The controlling interest transfer tax on entities that own Class 4A property worth over $1 million uses the same graduated rates and is now also imposed on the seller, for interests transferred under contracts fully executed on or after July 10, 2025. Division of Taxation, CITT change
Can the buyer pay it?
The parties can apportion or shift the burden in their contract. The Division says the legal liability stays with the seller, and it does not interpret private contracts. Negotiate it in the letter of intent and have your attorney write it into the contract. Division of Taxation memorandum
Who is exempt: the Division notes no graduated fee is due when the buyer is a 501(c)(3) nonprofit, and lists other exemptions in the instructions for Form RTF-1EE. That form must be attached to every deed over $1,000,000 and every commercial property transfer. Division of Taxation
Owner questions
Who pays the NJ mansion tax on a commercial building now?
The seller, for transfers on or after July 10, 2025, on Class 4A commercial property sold for more than $1 million. The contract can shift the cost to the buyer.
Does it apply to a warehouse?
Not if the property is listed as Class 4B industrial on the town’s tax list. Check the class on your tax bill or with the assessor.
Is it charged only on the amount over $1 million?
No. The rate applies to the whole price. A $3,600,000 sale pays 3.5% of $3,600,000, which is $126,000.
Related
Talk to AcreX
Book a consultation with Jonathan Libock · Call (201) 694-6463 · jon@acrex.co
By Jonathan Libock, AcreX · General information, not tax or legal advice. Sources: P.L. 2025, c. 69; NJ Division of Taxation Realty Transfer Fee page, Graduated Percent Fee exemptions notice, Graduated Percent Fee policies memorandum (July 9, 2025) and CITT change notice. Checked November 10, 2026.
AcreX Realty LLC, Licensed Real Estate Broker, 307 Bloomfield Ave, Caldwell, NJ 07006. Licensure does not imply endorsement. In New Jersey commissions are negotiable.