Q. I lived in New Jersey for 60 years. Six years ago, I bought a home in Florida and became a resident there. I kept my New Jersey home and then decided to downsize and build a smaller home. When the smaller home was almost finished, we put the other one up for sale and it just sold. Do I have to pay what is called an exit tax even though I’ll still have a home in New Jersey?
— Two-state guy
A. The “exit tax” is commonly misunderstood, so we’re glad you asked.
The tax is actually an estimated tax imposed at closing on the sale of New Jersey real estate by a nonresident individual.
“Only a sale of a principal residence owned and used as such for a period of at least two of the preceding five years qualifies for exclusion of gain of up to $250,000 — $500,000 if a married joint filer,” said Neil Becourtney, a certified public accountant and tax partner with CohnReznick in Holmdel.
Because you became a Florida resident six years ago, your original New Jersey residence does not meet this requirement, he said. So, if a gain was generated on the sale, it will be subject to New Jersey nonresident tax as well as federal tax.
Becourtney said the exit tax will be owed at closing and will be equal to the greater of 10.75% of the gain realized or 2% of the sales price.
“If this payment turns out to be higher than the tax incurred, you will be entitled to a refund after filing your New Jersey nonresident income tax return,” he said. “On the other hand, should this payment be less than the tax incurred, then you will have a balance due with your return.”
Email your questions to Ask@NJMoneyHelp.com.
Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com’s weekly e-newsletter.
"Exit" - Google News
January 19, 2021 at 09:30AM
https://ift.tt/38Y9t5u
Will I owe the exit tax if I buy another home in N.J.? - NJ.com
"Exit" - Google News
https://ift.tt/2zNkU0N
https://ift.tt/2YrnuUx
Bagikan Berita Ini
0 Response to "Will I owe the exit tax if I buy another home in N.J.? - NJ.com"
Post a Comment