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A despicable tax if ever there was one! The NJ manison tax is a 1% additional transfer fee on residential property over $1M sales price. it is 1% on each the seller and the buyer - so really 2% - in addition to the normal transfer fee, so just keep on adding it up!
As a transfer fee, it is not currently deductible as a real estate tax. Like other closing costs/fees on a residence, it is not a deductible item. Presumably the seller can apply it to offset his gain (if the other exemptions aren't enough) and the buyer can capitialize it to his basis, possibly avoiding a future gain.
EDIT:
This answer is wrong. The mansion tax is ONLY imposed on the buyer of NJ residential property over $1M -- NOT the seller. The buyer cannot currently deduct the tax; it should be capitalized as part of the basis of the purchased property (along with the other costs of acquisition, e.g. legal fees, recording fees, and such.)
What else can I help you with?
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