Ron, in NJ, you cannot list a home for sale as 4 bedrooms if the septic only accommodates a 3 bedroom home. Laura, I don't know what needs to be done with your septic system but you may want to consider installing a 4 bedroom system if it is important for the sale. Yes, it could affect the interest of buyers as people will see it as a "more expensive" 3 bedroom when in reality it has 4. However, it is not an uncommon situation. The buyers just need to be educated by their Realtors. We, as agents in NJ, are not permitted to list your home as a 4 bedroom but can, in the comments, state that it has 4 bedrooms with a 3-bedroom septic. At any rate, yes, the tax department does not care about the septic size so you will be taxed as a 4 bedroom but the septic records will state that it is a 3-bedroom septic. I hope that helps.