Closing Costs in NY vs NJ: Full Comparison for Buyers

For buyers deciding between settling in Manhattan/Brooklyn or crossing the Hudson to Jersey City/Hoboken, understanding the difference in closing costs is critical. While both states impose a "Mansion Tax" starting at $1 million, the tax liability and rates differ drastically.

Who Pays the Mansion Tax?

The most significant difference between the two states is who legally bears the burden of the Mansion Tax.

• New York: The Buyer is legally required to pay the Mansion Tax.
• New Jersey: Historically paid by the buyer, a sweeping legislative change effective July 2025 shifted the New Jersey Mansion Tax liability entirely to the Seller.

This means a buyer purchasing a $1.5 million property in New Jersey faces a much lower cash-to-close requirement than a buyer purchasing a similarly priced property in New York, as the NJ seller now absorbs that 1% fee.

Mansion Tax Rate Structures

Both states use a "cliff" structure—once you hit $1 million, the tax applies to the entire purchase price, not just the amount over $1 million.

• New York: Employs progressive rates ranging from 1% to 3.9%. The 1% rate applies from $1M up to $1.99M, increasing in tiers until hitting the maximum 3.9% at $25 million.
• New Jersey: Uses tiered rates ranging from 1% to 3.5%. The 1% rate applies from $1M to $2M, but the maximum 3.5% rate kicks in much earlier, for properties over $3.5 million.

Other Closing Cost Differences

Beyond the Mansion Tax, buyers should be aware of:

• Mortgage Recording Tax (MRT): New York City imposes a heavy MRT on buyers (typically 1.8% to 1.925% for loans over $500k). New Jersey does not have a comparable mortgage recording tax, saving buyers thousands upfront.
• Title Insurance: Both states have regulated title insurance premiums, but NY rates are generally higher.
• Property Taxes: While NJ closing costs are significantly lower for buyers, New Jersey typically has much higher ongoing annual property taxes compared to NYC.

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Disclaimer: The information provided in this guide is for educational purposes only and does not constitute legal or tax advice. Please consult with a qualified real estate attorney or tax professional regarding your specific transaction.