27 Oct I moved to Florida. When I sell my N.J. home, is there an exit tax?

Q. I have been a Florida resident since July 2022. I live in Florida 6-plus months out of year and I still own a home in New Jersey that I don’t rent out. I lived there for four years, and for two-and-a-half years, it was my primary residence. I’m now selling the New Jersey home and buying another in the state. I bought the current home for $305,000 in 2019 and will sell it for $468,000. The new home I will buy costs $350,000. They are taking 2% tax from me at closing. Can I get this back if I file some New Jersey tax form? I didn’t think I would have to pay this tax because I was buying another home in New Jersey.
— Mover and shaker

A. You’re talking about a tax that’s commonly called “the exit tax,” but it’s really just an estimated tax, pre-paid at closing so the state knows the home’s seller won’t take the money and run.

Here’s what you need to know.

If you will be residing in Florida for more than six months and have resided there since July of 2022, it sounds as though for tax purposes you have become a Florida resident, said Neil Becourtney, a certified public accountant and tax director with Smolin, Lupin & Co. in Red Bank.

That would make you a New Jersey nonresident taxpayer, he said.

“You would file Form NJ-1040NR for 2023 and claim the 2% tax withheld at closing as a payment,” he said. “If you have no New Jersey source income then you would be entitled to a refund of the entire amount.”

As far as whether the 2% tax should be withheld, you are correct that there is an exception if the property sold meets the definition found in Internal Revenue Code Sec. 121 of a principal residence both owned and occupied for a period of at least two out of the preceding five years, he said.

“The fact that you are buying another home in New Jersey is not relevant,” Becourtney said. “To avoid having the tax withheld, you would need to complete Form GIT/REP-3, State of New Jersey Seller’s Residency Certification/Exemption and give it to the settlement agent at closing.”

Email your questions to .

This story was originally published on Oct. 27, 2023. 

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.