The “Exit Tax” is Not Even a Tax, It Is An Estimated Tax Payment.
When a home is sold in New Jersey, sellers have to make an estimated tax payment at the time of closing.
This estimated tax payment is actually the “exit tax” that have so many New Jersey homeowners have questions about. New Jersey imposes this tax to make sure homeowners pay what is owed on their final state tax return even if they no longer live in the state.
State rules say the estimated tax payment shall not be less than 2 percent of the consideration for the sale as stated in the deed.
To qualify, the home would have had to be your principal residence for 24 of the previous 60 months.
There are many exceptions to the rule! The most common of which is that the property is the homeowner’s primary residence and they are exempt from capital gains under the Federal Tax Code (Section 121 of the Internal Revenue Code).
Obtaining legal advice from an experienced New Jersey real estate attorney is essential when selling a home in the state, especially if the homeowner has plans to leave the state during or after the sale.
Dash Farrow, LLP, provides personal attention to each real estate client, and a high degree of responsiveness throughout the process. We take pride in minimizing transaction time, while ensuring client needs are met every step of the way. Trust our experienced team of real estate professionals when buying or selling a property in New Jersey.