The exit tax is really an estimated tax on the sale of your home.
“This estimated tax is adjusted when the seller files a New Jersey tax return for the year of the sale,” he said. “The seller must pay this tax prior to leaving the state, even if there isBut the state takes all that into account once the year-end income tax return is filed.”
The state requires the prepayment so that no New Jersey resident can move out of the state and fail to file state tax return, essentially leaving the state without paying the tax that would be due. “Although the prepayment obligation is an inconvenience for a seller moving out of New Jersey, the tax is refunded or reduced as appropriate at the time of filing if there was no gain after exemptions are taken,” DeFelice said.
Once you sell a home in New Jersey and are leaving the state, you are technically considered a non-resident, he said. For non-residents who have New Jersey income taxes withheld at their closing, rather than wait to file their tax return, they can file a Form A-3128 to claim an early refund after closing along with proof of overpayment.
As far as actual capital gains, people who live in their primary residence for two of the last five years get a large tax break.on the first $250,000 of gains and married couples filing jointly are exempt on the first $500,000 of gains,” he said. “This exemption is only allowable only once every two years, and as the seller you must not have sold another home and claimed the exemption within the last two years.
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