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New Jersey residents who sell their New Jersey home and move outside of this state are considered nonresidents for the purpose of the sale. New Jersey may require an estimated tax payment at closing, and the seller will need to file a nonresident tax return to report any gain or loss.
Even if you sell the home at a loss or there is no capital gain, nonresidents are still required to make an estimated tax payment of 2 percent of the sale amount. Under these scenarios, you won't owe any tax and will get the entire 2 percent back when you file your New Jersey nonresident tax return.
Net Tax Benefit means, for each Taxable Year, the amount equal to the excess, if any, of eighty-five percent (85%) of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year over the total amount of payments previously made under Section 2.01, excluding payments attributable to any Additional Amount.
Most policyowners cannot reclaim exit tax. However there are certain policyowners who may reclaim the exit tax deducted.
The New Jersey Exit Tax is no different. If you remain a New Jersey resident, you'll need to file a GIT/REP-3 form (due at closing) and it will exempt you from paying estimated taxes on the sale of your home.

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P.L. 2004, Chapter 55 became effective August 1, 2004 and was enacted to ensure that the state would collect income tax from nonresident sellers on the resulting gains from sales of property. This tax payment is collected at closing and is a required condition to recording the deed.
Despite the confusion caused by calling it an exit tax, the law simply requires the seller to pay state tax in advance, calculated as follows: New Jersey withholds either 8.97% of the profit or 2% of the selling price, whichever is higher.
Net of Taxes = Gross Amount \u2013 Amount of Taxes The amount net of tax can be calculated by subtracting the amount of taxes from the gross value.
\u201cThe most common exceptions are when the seller is a resident taxpayer or the property being sold was used exclusively as a principal residence and qualifies under IRS Code Sec 121 to exclude gain on the sale of a primary residence,\u201d he said.
Since your home was your principal residence for at least 24 out of the prior 60 months there will be no taxable gain and no estimated tax payment will be required,\u201d Kiely said. Email your questions to Ask@NJMoneyHelp.com.

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