11 Aug Mom died and we’re selling her home. What will the exit tax be?

Q. My family is settling the estate of our mother’s in New Jersey. Two out of three children do not live in New Jersey. What will the exit tax be?
— Helping

A. We’re sorry to hear about your mother.

Here’s what to consider.

When a decedent’s real estate is sold, it is either sold by the estate, or if the property has been transferred, by the beneficiaries, Michael Karu, a certified public accountant with Levine, Jacobs & Co. in Livingston.

In either case, the profit is calculated based on the difference between the selling price and the cost basis, he said.

“The cost basis is the sum of the value per the inheritance tax return, if filed, or the appraised value as of the date of death plus any closing costs on the sale plus any expenses incurred while getting the house ready for sale,” he said.

As for the so-called exit tax, this is not a separate tax for someone leaving the state. Instead, it’s an estimated tax based on profit from the sale of the home. This is collected at the time of closing.

“The non-resident children will have to file New Jersey Non-Resident Income Tax Returns if their pro-rata share of the profit is a gain,” he said.

If you overpaid the tax at closing, you could get a refund.

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This story was originally published on Aug. 11, 2022.

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