Over the summer, New Jersey and the City of Philadelphia increased their realty transfer tax rates, with New Jersey making significant changes to its realty transfer tax regime for high-value property sales. Rhode Island not only increased its real estate conveyance tax but also enacted a new tax on non-owner-occupied residential property with an assessed value of at $1 million or more. While not a law change, the Pennsylvania Department of Revenue updated the Common Level Ratios (CLR), which are used in calculating real estate transfer taxes.

New Jersey increases its realty transfer tax fees and shifts responsibility to sellers

On June 30, 2025, New Jersey enacted its budget for Fiscal Year 2026 (A.5804, the law). In response to ongoing budget deficits and revenue shortfalls, the law makes significant changes to the state's realty transfer tax regime for high-value property sales.¹ The law took effect on, and applies to transfer made on or after, July 10, 2025.

There are two components to New Jersey's real estate transfer taxes imposed on recorded instruments: (1) the Realty Transfer Fee, and (2) the Supplemental Fee to the Realty Transfer Fee (previously known as the "Mansion Tax" and will now be known as "the Graduated Percent Fee").² The law makes no changes to the Realty Transfer Fee, but does amend the "Mansion Tax" for certain realty transfers in excess of $1 million.

Historically, the "Mansion Tax" was borne by the buyer and imposed on the following taxable property classes:

• Class 2 — residential properties
• Class 3A — farms with residential improvements
• Class 4A — commercial properties (excluding industrial or apartment buildings)
• Class 4C — cooperative units³

Additionally, the Mansion Tax was imposed on controlling interest transfers, which applied to transfers of real property classified as "4A commercial" property if the consideration or valuation of the real property was greater than $1 million.

The law renames the historic Mansion Tax to the Graduated Percent Fee and increases the rates for certain transactions and properties subject to transfer tax from 1% to rates ranging from 1% to 3%. The applicable rate is based on the total consideration of transfers over $1 million,⁴> as detailed in the chart below. The law also shifts the legal responsibility for paying the tax/fee to the seller.

The rates below are imposed on the entire consideration of the transaction, not on a graduated basis. As such, a transfer of $10 million will be subject to transfer tax at the flat rate of 3.5% with respect to the Graduated Percent Fee.⁵ The consideration or sale price range is as follows:

As a result of the law, a real estate transaction involving the recorded transfer of certain real estate in excess of $1 million in New Jersey could be subject to transfer tax at a combined rate of 4.71%. For instance, a transfer of a residential property with a fair market value of $3.5 million or more will be subject to the Realty Transfer Fee with a graduated rate of 1.21% and the Graduated Percent Fee based on the consideration which is imposed at a rate of 3.5% for a combined total rate of 4.71%. Notably, the controlling interest transfer tax is limited to the Graduated Percent Fee at a maximum rate of 3.5%.

The law also includes a transitional refund provision. Sellers who executed a binding contract before July 10, 2025, and record the deed on or before November 15, 2025, are eligible to claim a refund for any portion of the graduated fee that exceeds 1%.⁶ To do so, the seller must submit Form RTF-3 to the New Jersey Division of Taxation within one year of the deed's recording date.⁷

Philadelphia enacts marginal increase in realty transfer tax rate and recordation fees

On June 12, 2025, the City of Philadelphia enacted Bill No. 25021100 (the bill), which amends the Philadelphia City Code and is part of Mayor Parker's H.O.M.E. (Housing Opportunities Made Easy) Plan. Starting July 1, 2025, the bill increases the real estate transfer tax rate for direct transfers of real property or controlling interests in real estate companies from 3.278% to 3.578% and marginally increases various recording fees.⁸ The total transfer tax rate for direct transfers of real property or controlling interests in real estate companies with interests in Philadelphia realty will be subject to a combined state and City transfer tax rate of 4.578%.

Although the City increased its transfer tax rate, no changes were made to filing deadlines (i.e., the deadline remains 30 days after a taxable transfer), or the forms required to be filed (i.e., Philadelphia Real Estate Transfer Tax Certificate or City of Philadelphia Certificate of Transfer).⁹

Pennsylvania releases its annual updates for the CLR

The Pennsylvania Department of Revenue has published its annual update for CLRs for the period from July 1, 2025, through June 30, 2026. The CLR is established annually by the State Tax Equalization Board and is compiled based on sales data from the prior calendar year (i.e., current CLRs are compiled from 2024 data). CLRs play a critical role in calculating real estate transfer taxes and they are essential in property tax appeals, as CLRs help ensure assessments reflect current market conditions.

Rhode Island increases its real estate conveyance tax and imposes a new tax on certain non-owner-occupied residential property

Rhode Island budget bill (HB 5076Aaa, the bill) became law without the governor's signature on June 29, 2025.¹⁰ Among the tax changes included in the bill is an increase to the state's real estate conveyance tax. The tax is imposed on each deed, instrument or writing by which interest in real estate is conveyed to a purchaser and when the consideration paid exceeds $100. The bill increases the tax rate from $2.30 to $3.75 for each $500 or fractional part of the purchase price. The bill also increases the rate of the additional real estate conveyance tax imposed on properties over $800,000 from $2.30 to $3.75 for each $500 or fractional part of the consideration in excess of $800,000 that is paid. These changes take effect October 1, 2025. Starting in 2026, the $800,000 threshold will be adjusted annually by the percentage increase in the Consumer Price Index for all Urban Consumers (CPI).

The bill also imposes a new tax on non-owner-occupied residential property with an assessed value of $1 million or more. "Non-owner occupied" is residential property that is not the owner's primary residence and is not occupied by the owner for a majority of days in a given tax year (i.e., July 1 through June 30). The new tax is imposed for tax years beginning on or after July 1, 2026, and is in addition to any other taxes. The tax is calculated based on the assessed value of the real estate and imposed at a rate of $2.50 for each $500 or fractional part of the assessed value in excess of $1 million. Beginning July 1, 2027, the $1 million threshold will be adjusted annually by the percentage increase in the CPI. The tax does not apply to any properties or buildings that are rented or were rented for more than 183 days during the prior tax year and subject to the Residential Landlord Tenant Act or to sales and use tax and/or hotel tax.

Implications

Taxpayers with current or planned transactions involving assets or entities that directly or indirectly own or hold interests in real property located in the City of Philadelphia, the Commonwealth of Pennsylvania, or the States of New Jersey or Rhode Island, should consult their tax advisors regarding the impact of these changes.