07 Oct When we move, will we qualify for a cap gain exclusion?

Q. We are planning to move to North Carolina and we have been New Jersey residents our whole lives — 70 years. We have had our primary residence here in New Jersey for 46 years and we have never lived anywhere else. Am I correct to assume we can take the $500,000 exemption for me and my spouse from the sale for New Jersey tax purposes?
— Moving soon

A. Congrats on your move.

New Jersey will miss you.

When selling your primary residence, you may qualify to exclude up to $500,000 of the gain if you are married filing jointly, or $250,000 if you are single, on the sale of your property, said Matt Rembish, a certified financial planner with OneDigital in Boonton.

He said there are two tests that you need to pass to qualify.

First is the ownership test. You need to have owned the home for at least two of the last five years.

Second is the use test. You need to have lived in the home as your principal residence for at least two of the last five years.

“To get this exclusion on your New Jersey state tax return, you will need to pass an additional test: the ‘additional home test.’” Rembish said. “This states that during the last two years, you didn’t exclude a gain from the sale on another home.”

When selling your home in NJ, you will also need to pay a “Realty Transfer Fee,” which is based on what you sell the property for, Rembish said.

You can see the rates here on the state Treasury’s website.

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This story was originally published in October 2024.

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