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ericwvv, Home Owner in Cherry Hill, NJ

I had tax paid non resident tax at settlement yet I was later considered a NJ res. How does that impact my tax return?

Asked by ericwvv, Cherry Hill, NJ Tue Oct 23, 2012

My ex wife and I lived in another state and owned two investment properties in NJ. We separated in 2008 and I moved into one property in May 2008 as my residence. We sold the other property in December of 2008 and had the 2% of the sale price reserved for the state as I would guess transfer tax for out of state residents. We divorced officially in 2009. I am just now filing my return for that year and would like to know if I can use the monies that we paid for the tax as out of state residents (even though I was a resident at the point of sale) against the money that I will owe as capital gains when my taxes are filed. I am confused with the exit tax, transfer tax and capital gains tax relationship. Thanks

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Larry Sarlo 609-868-1171’s answer
Some refer to it as an NJ Exit Tax Not Really!

It is an estimated income tax payment on the gain paid at time of closing. Its a way of assuring taxes will be collected.

a 2% tax on the sale of the property - 2% of the price listed on the deed that you will pay directly to the state at the closing table. It's also been labeled the exit tax - because if you are not moving to another residence within NJ at the time of deed transfer, they want that money up front, at closing because of course it will be more difficult to get it from you if you live out of state.

You will complete a Seller's Residency Certification/Exemption (form GIT/REP3) http://sellitfast123.com/wp-content/uploads/2011/12/gitrep3.pdf for NJ resident taxpayers at settlement. It has 8 exemption options and you'll choose which apply. Refunds will be given to you of that money when you file your return , that is if you qualify for a refund.

Section 121 of the Internal Revenue Code

Section 121 of the Internal Revenue Code, which is often referred to as the 121 exclusion, generally allows homeowners to sell real property held (owned) and used (lived in) as their primary residence and exclude from their taxable income up to $250,000 in capital gains per homeowner, and up to $500,000 in capital gains for a married couple filing a joint income tax return.

Primary Residence
The 121 exclusion can only be used in conjunction with real property that has been held and used as the homeowner’s primary residence. It does not apply to second homes, vacation homes, or property that has been held for rental, investment or use in a trade or business
Homeowners are required to have (1) owned and (2) lived in the real property as their primary residence for at least a combined total of 24 months out of the last 60 months (two out of the last five years) in order to qualify for the 121 exclusion. The 24 months does not have to be consecutive. There are certain exceptions to the 24 month requirement when a change of employment, health, military service or other “unforeseen circumstances” have occurred.

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0 votes Thank Flag Link Tue Oct 23, 2012
You made an estimated tax payment, based on the sales price, to the State of New Jersey. You will get credit for amount paid when you file your tax return for 2008.
0 votes Thank Flag Link Mon May 5, 2014
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