Whether you're a resident or not, N.J. wants its piece of your profits.
for purposes of withholding on any tax on the gain from the sale, said Michael Eagan, director of national tax for CohnReznick in Holmdel.
“Unlike for sellers that continue to maintain New Jersey residency and file New Jersey resident tax returns, for nonresidents, New Jersey requires withholding of a portion of the sales price as an advance payment of any New Jersey tax due with respect to the gain,” he said.Any excess amount withheld will be refundable when you file your part-year resident/part-year nonresident tax return in New Jersey for the year of sale, Eagan said.
“Note that federal and New Jersey law both exclude up to $500,000 of gain realized on the sale of a residence by a joint return filer — $250,000 for a single filer — provided the home was both owned and used by the taxpayers as their principal residence for at least two out of the preceding five years,” he said.
As your investment properties are also in New Jersey, any gains on those sales will also be subject to New Jersey tax, Eagan said. You may need to file tax forms in New Jersey as in the years you sell New Jersey properties to report any gain related to those sales, he said. “Your status as a nonresident also affects the withholding of New Jersey tax on the sale of New Jersey properties, as a portion of the sales price of each property will be withheld as an advance payment of New Jersey tax owed on any sale gain,” he said. “Any excess of the withheld amount over the tax ultimately owed is refundable.”
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