30 May If I sell my co-op after only 6 months, what taxes are owed?

Q. I purchased a co-op in New Jersey on February 2, 2022. I have been living here as my primary residence and I’m renovating the apartment. I am thinking maybe I will sell it in a few months. How would it work regarding capital gains tax and exit tax? I’m not married and there would definitely be a profit of at least $65,000.
— Moving

A. We’re definitely living in a seller’s market.

But you’re probably going to owe taxes on your sale.

For both federal and New Jersey purposes, a single taxpayer can exclude from income up to $250,000 of gain realized from the sale of their principal residence if they owned and used it as such for a period of at least two out of the preceding five years, said Neil Becourtney, a certified public accountant and tax partner with CohnReznick in Holmdel.

If you sell your New Jersey apartment later this year, clearly you will not meet this test, he said.

But a partial exclusion of the gain is available if you meet any certain requirements, Becourtney said:

These include a work-related move involving a work location at least 50 miles farther from the home than your old work location, a health related move, or an unforeseeable event such as the home being destroyed, suffering a casualty loss because of a natural disaster, death, becoming divorced, giving birth to two or more children from the same pregnancy or becoming eligible for unemployment compensation.

“Assuming none of these exceptions apply, you will have a short-term capital gain to be combined with any other capital gains and losses reportable on your 2022 income tax returns,” he said. “In calculating your gain, any capital improvements that you make will be added to your original purchase price. Additionally, closing costs, such as realtor commissions and attorney fees, will reduce your gain.”

As far as the “exit tax” goes, this term refers to a New Jersey estimated tax payment being imposed at closing on the sale of a New Jersey residence by a nonresident individual, Becourtney said.

“If on the date of sale of the apartment you have become a nonresident of New Jersey, then you would owe at closing the greater of 10.75% of the gain realized or 2% of the sales price,” he said.

Email your questions to .

This story was originally published on May 30, 2022.

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.