Congratulations! You’re selling your New Jersey home. Now comes the not-so-fun part: figuring out the taxes. Fear not, this blog will be your guide through the Garden State’s home selling tax landscape.
Capital Gains Tax
There’s a good chance you won’t owe any federal capital gains tax on the profit from your home sale. New Jersey offers an exemption of up to $250,000 for single filers and $500,000 for married couples filing jointly, provided you owned and lived in the residence for 2 out of the 5 years before the sale. This is similar to the federal requirements.
Realty Transfer Fee
This is a flat fee of 1% of the sale price, paid by the seller at closing. There are some exemptions, such as for sales between family members. For properties over $1 million, the buyer may also be responsible for an additional 1% fee.
Exit Tax (Sort Of)
New Jersey doesn’t actually have a separate “exit tax” This term can be misleading. What they do have is a requirement for non-resident sellers to prepay a portion of their estimated capital gains tax at closing. This prepayment is applied to your final tax bill when you file your return.
Other Taxes
There are no sales taxes on home sales in New Jersey. However, you may need to factor in federal capital gains taxes if your profit exceeds the state exemption. Also, depending on your situation, you might be able to claim deductions for selling expenses.
Getting Help
Tax laws can be tricky, so consulting with a tax professional familiar with New Jersey’s rules is recommended. They can help you determine your exact tax liability and ensure you’re taking advantage of all available deductions and exemptions.
Key Takeaways
- Capital gains tax exemption for profits up to $250,000/$500,000.
- 1% seller realty transfer fee, with possible additional buyer fee for high-value properties.
- Non-resident sellers prepay estimated capital gains tax at closing.
- Consider consulting a tax professional for personalized advice.
By understanding these taxes, you can be better prepared for the financial aspects of selling your New Jersey home. Now you can focus on the exciting parts, like finding your new place!