07 Jun I’m a senior. Will I owe taxes when I sell my condo?
Q. I am selling my condo in an adult community in Bergen County. Will I have to pay tax on the sales price? And is there a tax break for seniors? I’m 75.
— Taxed out
A. Congratulations on the sale of your condo.
You may be eligible for a tax break.
If your condo was your primary residence, and you lived in your home for two out of the last five years prior to the sale, then you would be entitled to an exclusion for federal tax purposes of $250,000 of the capital gain for single filers and $500,000 of the capital gain for taxpayers that are married filing jointly, said Patricia Daquila, a certified financial planner and certified public accountant with Peapack Private Wealth Management in New Providence.
The good news is that for New Jersey taxation, the gain would be calculated the same way as it is for federal tax purposes, she said. If you qualify federally, you will for the state, too.
Daquila said you should remember that you can only exclude a gain on your sale of your primary home one time every 24 months for both federal and New Jersey taxes.
As far as tax breaks for seniors, there’s not one specific to real estate transactions, but the state does offer a retirement income exclusion that you may qualify for, she said.
If you are 62 years or older or disabled as defined by Social Security and if your income is less than $100,000, then you may exclude pensions and retirement income up to $100,000 for married taxpayers filing jointly taxpayers and $75,000 for single taxpayers, she said.
“If your income is higher than those limits but less than $150,000, you may qualify for an exclusion for a reduced amount,” she said.
You may also qualify to use the unused portion of the retirement exclusion to other retirement income, she said.
Before making any moves, you should speak to a tax professional who can examine the details of your situation.
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This story was originally published on June 7, 2022.
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