29 Apr I inherited a co-op. Do I owe the exit tax?

Q. I inherited a co-op when my mom passed. I’ve lived in it for about 13 years and I am planning on selling and moving to Georgia. I’m concerned about owing an exit tax. I always thought I wouldn’t have to worry about it because I may only get about $85,000 when I sell. Can you advise?
— Selling soon

A. Homesellers are often confused about the so-called “exit tax.”

First, there is no true “exit tax,” said Michael Karu, a certified public accountant with Levine, Jacobs & Co. in Livingston.

The exit tax is really an estimated tax that some sellers may need to pay on the profit from the sale.

Indeed, the profits on sales of certain real properties may be taxable, Karu said.

“However, since it is your personal residence, under federal tax law there is a $250,000 exclusion,” he said. “That means the first $250,000 of gain is not taxable.”

For married couples, the exclusion is $500,000.

New Jersey follows the federal law, so there is no New Jersey tax either, Karu said.

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This story was originally published in April 2025.

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