01 Feb What will we owe in taxes on the sale of our N.J. home?

Q. Our primary residence is in Florida and we have owned a New Jersey home since 1999. Our son and his family have been living in it for the last 10 years. Our income is about $108,000, but about $45,000 is non-taxable military disability income, leaving roughly $63,000 as our joint taxable income. We file married filing jointly. I understand the exit tax and I don’t think there will be a federal capital gains tax if we sell because we are below the $80,000 taxable income maximum, which puts us at zero liability. But what happens for our New Jersey non-resident obligation?
— Still working

A. We’re glad you asked.

Unfortunately, one of your assumptions is wrong.

On your federal tax obligation, married individuals filing jointly with taxable income of $80,000 pay zero percent on long-term capital gains, but the taxable income includes the income you make on the sale of your home in New Jersey, said Gail Rosen, a Martinsville-based certified public accountant.

“In your scenario, the capital gain on the sale of your home pushes you into a higher tax bracket and you will not avoid paying federal capital gains tax,” Rosen said.

For state tax purposes, the capital gains will be taxed as ordinary income, and subject to New Jersey tax at ordinary rates, she said.

For a review of the so-called exit tax, which is really just a prepayment of estimated taxes, see here.

If you’re not sure how it all works, we recommend you work with an experienced tax preparer who can look at your entire situation.

Email your questions to .

This story was originally published on Feb. 1, 2022.

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