Home Selling in 08003>Question Details

Janice Webber, Home Seller in 08003

is there an exit tax when selling a home in nj and moving out of state?

Asked by Janice Webber, 08003 Tue May 1, 2012

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There IS a tax form you need to fill out in NJ which requires you to tell them if you are a resident or not when transferring real estate. I believe it's for income tax purposes (a great way to get around calling it an "exit tax") but makes you pay 2% income tax on the "consideration" of the sale (not profits), upfront, if you are no longer a resident of NJ and not filing taxes in the state. So I believe if you have already established residency in another state, the first form will apply to you.

Of course you should speak to your attorney or tax consultant to fully understand the what's-what...and what you are responsible for, BUT here's the FAQ from the NJ tax department:

http://www.state.nj.us/treasury/taxation/gitrepfaqs.shtml

In part it says:

Q: I moved out of New Jersey on or after the day of transfer. Am I considered a resident or a non-resident?
A: When you move out of the State of New Jersey on or after the day of transfer you are considered a non-resident. Part-year residents are considered non residents.

Q: I moved out of New Jersey on or after the day of transfer. Can I qualify for an exemption under Section 121?
A: Yes. You can qualify for an exemption under Section 121 if the real property being sold or transferred was used exclusively as your principal residence within the meaning of section 121 of the federal Internal Revenue Code of 1986, 26 U.S.C. s. 121. The requirements outlined in the Internal Revenue Service Publication #523 must all be met. However, if your entire gain cannot be excluded from your gross income, you do not qualify for the exemption.

Q: If a non-resident seller/grantor recognizes no gain from the sale or transfer of real property in New Jersey, is he/she required to make an estimated Gross Income Tax payment?
A: Yes. Even if no gain is recognized by the seller(s)/grantor(s), the minimum 2% of the total consideration stated on the deed must still be paid on or before the time of closing.

Non-resident form
http://www.state.nj.us/treasury/taxation/pdf/other_forms/tgi…

This is the one for residents:
http://www.state.nj.us/treasury/taxation/pdf/other_forms/tgi…
2 votes Thank Flag Link Tue May 1, 2012
If this 2% of consideration is considered NJ state income tax, can I deduct it from my federal income tax return (I itemize my deductions)?
Flag Wed Apr 8, 2015
Actually, there is a 2% tax under certain circumstances. You have to live in NJ 2 out of the past 5 years AND filed your tax return for the previous year in NJ. Otherwise, there is a state tax that will be incurred if you have moved away. If you currently reside in NJ as your primary residence, then there is no additional "exit" fee. Look up section 121 of the federal tax codes for more information and I provided a link to the NJ forms section. Check with your accountant for current guidelines as tax codes change frequently.
1 vote Thank Flag Link Tue May 1, 2012
This did not keep NJ still billing me for the 2 Percent of selling Price (not Profits). I left NJ in 1999 (part time resident 1999), rented for almost 6 years - until 2005 sold 10/2004 and did not fill out NJ state Taxes since 1999, so almost 6 years later - after leaving the state - I still had to pay the bill.
Flag Mon Feb 9, 2015
IF I SELL MY HOME OF 30YRS IN NJ . AND MOVE INTO MY SONS HOME IN PHIL. DO I HAVE TO PAY AN EXIT TAX ?
0 votes Thank Flag Link Wed May 27, 2015
My Father in law recently passed away in NJ and has a House. My sister in law is maintaining the house until she can sell it, she lives in NJ. My question is My Wife and Brother in law do not live in New Jersey and are in his will and will be getting 1/3 each, Profits on the Sale (per the Will). Will they have to pay additional tax (Wife and Brother in law) and not sister in law because she is a resident??And if so, you can't tell me that this is not a "Penalty Tax" being a resident of another state other than NJ.???
0 votes Thank Flag Link Mon Feb 9, 2015
Yes there is!! I lived in NJ from 1989 to 1999 and had a house for 9 of the 10 years. I left the state in 1999 to go to work for the Federal Government and rented the House until 2005. Never heard about this tax and paid all cost and taxes required at closing. I received a bill for 2 percent of Full selling Price (not Profits) about a year later, which really wound up being about 7.5 percent of profits made. I probably could have filed a NJ non resident form back in 2005 or 2006 to recoup my money but, did not know any better. I guess It can't be recouped this much later. It just gets me that even though you are paying your taxes - which were higher in NJ in 2005 then my taxes in another state will be in 2015, and then when you leave they stick you with another Charge after you leave. No one told me about this even at closing - after they knew I was living out of state -
0 votes Thank Flag Link Mon Feb 9, 2015
There is an exit tax when selling a home in NJ, however if you are over 65 it is greatly reduced
0 votes Thank Flag Link Thu Jul 17, 2014
II am a Florida residence who is selling an home in New Jersey and buying another home in New Jersey. Do I have to pay an exit tax or transfer tax?
0 votes Thank Flag Link Wed Jun 11, 2014
you will pay a transfer tax for the sale of your home in NJ. Since you are not officially a NJ resident you would be subject to that 2% tax as well.
Flag Thu May 28, 2015
There is an exit tax.
Not sure what the criteria is but if you are selling your home in NJ and are moving to another state, There is an additional tax on top of the transfer fee and income tax.

I just did a closing and the seller was charged $7850 for $380k sale mortgage paid off was $300k

I'm trying to find out more about it.
0 votes Thank Flag Link Mon Jul 15, 2013
It is always best to speak with your accountant about your particular situation, but in NJ we have a Realty Transfer Tax. Looks like everyone below me handled the question pretty well. However, if you have owned the home for less than 2 years, there is a Capital Gains Tax. Best of Luck!
0 votes Thank Flag Link Sat May 26, 2012
There can be 2% of set aside only if you are currently living out of State. On investment properties there is a capital gains tax. On owner occupied there are large $250,000 deductions for each tax payer so H/W can have $500,000 gain and no tax. Hopefully this helps.
Kurt Guenther 609-922-1605
0 votes Thank Flag Link Tue May 1, 2012
There is no "exit tax" but there is a Realty Transfer Tax that is paid by the seller.

The Realty Transfer Fee rates on standard transactions and "new construction" transfers is as follows;

REALTY TRANSFER FEES IMPOSED ON SELLER, TOTAL CONSIDERATION NOT IN EXCESS OF $350,000
$2.00/$500 of consideration not in excess of $150,000;
$3.35/$500 of consideration in excess of $150,000 but not in excess of $200,000;
$3.90/$500 of consideration in excess of $200,000 but not in excess of $350,000.


REALTY TRANSFER FEES IMPOSED ON SELLER, TOTAL CONSIDERATION IN EXCESS OF $350,000
$2.90/$500 of consideration not in excess of $150,000;
$4.25/$500 of consideration in excess of $150,000 but not in excess of $200,000;
$4.80/$500 of consideration in excess of $200,000 but not in excess of $550,000;
$5.30/$500 of consideration in excess of $550,000 but not in excess of $850,000;
$5.80/$500 of consideration in excess of $850,000 but not in excess of $1,000,000;
$6.05/$500 of consideration in excess of $1,000,000.


Visit the State of New Jersey website for more info;
http://www.state.nj.us/treasury/taxation/lpt/rtffaqs.shtml


Linda Misinkavitch
Realtor
KingsGate Realty
57 W. Kings Highway
Mt. Ephraim, NJ 08057
(609) 280-2807 - mobile
(856) 931-1200 - office
0 votes Thank Flag Link Tue May 1, 2012
its amazing to me that so few people in this industry know about this 2 pct tax-not a realty transfer fee which is seperate
Flag Wed Mar 12, 2014
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