What will I owe when I sell my home?

Photo: pixabay.com

Q. We moved to North Carolina in July 2018. We bought in a home there in April 2018. Our New Jersey home has been on market since June 2018, and we’re closing on the sale soon. Since it was our principal residence, what tax do we owe New Jersey at closing?
— Sellers

A. Congrats on your new home, and the sale of your old one.

New Jersey follows federal law on the sale of personal residences, which means that the first $250,000 per person, or $500,000 for a couple filing a joint tax return, will be exempt from tax, said Michael Karu, certified public accountant with Levine, Jacobs & Co. in Livingston.

You can lose the exemption if you rented out the home, he said, but it seems your timing falls within the rules. 

Remember you have the opportunity to lower your gain further by deducting capital improvements. Learn more about that here.

We’re thinking you’re also concerned about the so-called exit tax. This isn’t really a tax, though.

Instead, New Jersey wants to make sure it will be paid whatever tax it’s owed after you leave the state, so funds are withheld to force the seller to file their final state tax returns rather than take money from the sale and run.

You can learn more about that here.

Email your questions to moc.p1566163584leHye1566163584noMJN1566163584@ksA1566163584.