Home Selling in 08086>Question Details

Bee, Other/Just Looking in 08086

Who pays an exit tax and how much is it?

Asked by Bee, 08086 Mon Oct 25, 2010

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BEE,

I think you are referring to the supposed tax you might pay when selling your house and moving OUT of NJ, not the NJ Homes Sales tax which is payed at closing by the seller (the NJ State Sales Transfer tax referred to in the previous post) .

I just happened to read this article about the supposed EXIT tax. Here's the link:
http://www.nj.com/business/index.ssf/2010/10/nj_exit_tax_has…

Very interesting article, since even RE attorneys can't agree on what it means. Seems , however, the consensus is that IF you own a house in NJ and another one out of state and sell the NJ house, it's really a capital gains tax, not a tax you would pay if you only owned a house in NJ and sold it to move to Arizona.

Hope that helps.
1 vote Thank Flag Link Mon Oct 25, 2010
I know NJ has a bad reputation when it comes to taxes, but there is not an exit tax. The sellers, if they are moving out of NJ, under certain circumstances have to pay a 2% withholding on the sale price. As mentioned in another answer, the state uses this to make sure you file a final tax return with the state of NJ. When you file your return, if you have overpaid, this amount is added to your other withholdings and you receive a refund. With home sale exemptions and current sale prices most people will not have capital gains taxes due. Your attorney and accountant are best equiped to give you a definitive answer. Being local, I can help you in your search, just contact me.
0 votes Thank Flag Link Mon Oct 25, 2010
Hi Bee,
Yes, there is a withholding if you are permanently leaving NJ. It is normally 2% of the deed consideration. This is done to insure that non residents file their returns and pay any amount due for gain on their property, which is determined when filing. Please contact your attorney or accountant to insure you have all of the information. There is also a real estate transfer tax paid by the seller, as Joe mentioned.
Best,
Diana
0 votes Thank Flag Link Mon Oct 25, 2010
The seller normally pays the NJ State Transfer tax on home sales.... use this online calculator to figure out the tax you'll pay.
http://www.madisontitle.com/generic/calculators/NJTransferTax.asp

I hope that's helpful... if so, click the "thumbs up" below,

Joe
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Joe Montenigro REMAX Home Team
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Serving Gloucester Twp, Washington Twp & South Jersey Real Estate Markets
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0 votes Thank Flag Link Mon Oct 25, 2010
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