28 May I’m moving out of state. Will I owe the “exit tax?”
Q. I need to move to Texas because my fiance’s work location changing. I bought the home 2.5 years ago. This is my primary residence. The home appreciated a bit – around $30,000 to $50,000. Still, I will lose money after the work I put in, the realtor’s commission and lawyer fees. Will I have to pay the exit tax?
A. Let’s get this straight.
The so-called exit tax isn’t really a different or extra tax. It’s a misconception.
It’s actually a pre-payment of estimated income tax that could be owed on the sale of a home, and New Jersey wants to make sure that residents who sell and move out of the state don’t skate on what they may owe as part of their final New Jersey tax return.
To your specifics: New Jersey income tax is not charged on the sale of a personal residence unless the gain is greater than $250,000 per spouse or the owner(s) do not qualify for the exemption, said Michaek Karu, a certified public accountant with Levine, Jacobs & Co. in Livingston.
He said they must have lived in the house for two of the prior five years. If not, different rules apply.
“There is no tax when you lose money on a personal residence for either federal or New Jersey tax purposes,” he said. “There is New Jersey income tax on the sale of non-personal residence real estate or business assets for the non-resident, but that’s the extent of it.”
Email your questions to moc.p1561587323leHye1561587323noMJN1561587323@ksA1561587323.
This story was originally published on May 28, 2019.
NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.