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sold. We will refund the taxpayer any overpaid tax once the return has completed
processing.
Additional Questions? See The FAQs on GIT Forms Requirements for Sale/Transfer of
Real Property in New Jersey.
Reporting Income/Loss on the Sale of Property
You will report any income earned on the sale of property as a capital gain. When filing your
New Jersey Tax Return, a capital gain is calculated the same way as for federal purposes. Any
amount that is taxable for federal purposes is taxable for New Jersey purposes. See IRS
Publication 551 for more information on Cost/Adjusted Basis.
New Jersey residents must complete Schedule B of the NJ-1040 and report any gain from
the sale of property as Net Gains or Income From Disposition of Property (if loss, enter 0).
Nonresidents must complete Part I of the NJ-1040-NR and report any gain from the sale of
New Jersey property as Net Gains or Income From Disposition of Property (if loss, enter 0).
Report any estimated tax payment paid at closing on the Estimated Payment/Credit line. Do
not report the estimated payment as New Jersey Income Tax Withholdings.
Principal Residence Exclusion:
Whether you still reside in New Jersey or became a resident in another state, you may qualify
to exclude all or part of the gain from the sale of your New Jersey home, based on federal
guidelines (See IRS Publication 523). To qualify, you must have sold your principal
residence in New Jersey, and you must meet the criteria on the following tests:
Ownership Test
: You owned the home for two or more years during the five-year
period ending on the sale date;
Use Test
: You lived in the home as your principal residence for two or more years
during the five-year period ending on the sale date;
Additional Home Test
: During the two-year period ending on the sale date, you
didn’t exclude a gain from the sale of another home.
If you met all three requirements and your filing status is:
Married Filing Joint, you may exclude up to $500,000 of the gain;
o
If only one spouse met the Ownership and Use Tests
, that qualified spouse can
exclude up to $250,000 of the gain;
Any other filing status, you may exclude up to $250,000 of the gain.
If you did not meet the above requirements (example, because of a change in place of
employment, health, or unforeseen circumstances), you may claim a reduced exclusion if
during the five-year period ending on the sale date, you: