rondds
Well-Known Member
- Oct 3, 2006
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a neighbor told me about this so i did a bit of nosing around and found this post on SNOPES.COM message board...
Several years ago, the State of New Jersey began requiring all property owners to execute a special tax form that must be attached to all deeds upon sale of the property, or the deed would be rejected by the recording office. There is the Seller's Residency Certification/Exemption (form GIT/REP3) for NJ resident taxpayers and contains eight exemption choices allowing for any taxes on the gain to be paid when filing NJ income taxes. Then there is the NonResident Seller's Tax Declaration (form GIT/REP1) for out-of-state residents who MUST pay a minimum 2% tax to NJ for the sale of any property. (Note that this 2% minimum is on the consideration listed on the deed - NOT 2% on the gain on the property. So if a Pennsylvania resident bought a summer property at the Shore for $100,000 in 1990 and sold it today for $500,000 he would be required to pay a minimum $10,000 tax to NJ at the time of the deed transfer (2% of $500,000) - the amount would not be calculated based on his $400,000 gain. He would have to file a non-resident tax return to recoup any amount overpaid, from what I understand of it.)
Now, up until earlier this year, many New Jerseyans selling their homes and moving permanently out of state were utilizing the GIT/REP3 (Resident) form, based on the assumption they would be filing New Jersey income taxes for that tax year and would pay the taxes (if any) on the sale of the property at that time. As of July 2007, they can no longer do so. The state Division of Taxation has "amended" their position that, in order to utilize the Resident form, the seller MUST be moving to a New Jersey address as of the date of deed transfer, or they must use the NonResident (GIT/REP1) form, thereby requiring them to pay the minimum 2% of the deed consideration directly to the state. I can only surmise that the sheer volume of residents fleeing to greener pastures - plus seeing an opportunity to further bloat the coffers - is what prompted NJ in its infinite wisdom to "clarify" their filing instructions
So, while it's not an "exit tax" per se, that is essentially what it has become - one last way for the Garden State to stick it to you on your way out the door.
can anyone verify this or does anyone have any definitive knowledge about this (hopefully) urban legend? another site (some realtor's blog) said that the "exit tax" is only imposed if the cap gain on the property is subject to cap gains tax on the federal level. man this is confusing.
Several years ago, the State of New Jersey began requiring all property owners to execute a special tax form that must be attached to all deeds upon sale of the property, or the deed would be rejected by the recording office. There is the Seller's Residency Certification/Exemption (form GIT/REP3) for NJ resident taxpayers and contains eight exemption choices allowing for any taxes on the gain to be paid when filing NJ income taxes. Then there is the NonResident Seller's Tax Declaration (form GIT/REP1) for out-of-state residents who MUST pay a minimum 2% tax to NJ for the sale of any property. (Note that this 2% minimum is on the consideration listed on the deed - NOT 2% on the gain on the property. So if a Pennsylvania resident bought a summer property at the Shore for $100,000 in 1990 and sold it today for $500,000 he would be required to pay a minimum $10,000 tax to NJ at the time of the deed transfer (2% of $500,000) - the amount would not be calculated based on his $400,000 gain. He would have to file a non-resident tax return to recoup any amount overpaid, from what I understand of it.)
Now, up until earlier this year, many New Jerseyans selling their homes and moving permanently out of state were utilizing the GIT/REP3 (Resident) form, based on the assumption they would be filing New Jersey income taxes for that tax year and would pay the taxes (if any) on the sale of the property at that time. As of July 2007, they can no longer do so. The state Division of Taxation has "amended" their position that, in order to utilize the Resident form, the seller MUST be moving to a New Jersey address as of the date of deed transfer, or they must use the NonResident (GIT/REP1) form, thereby requiring them to pay the minimum 2% of the deed consideration directly to the state. I can only surmise that the sheer volume of residents fleeing to greener pastures - plus seeing an opportunity to further bloat the coffers - is what prompted NJ in its infinite wisdom to "clarify" their filing instructions
So, while it's not an "exit tax" per se, that is essentially what it has become - one last way for the Garden State to stick it to you on your way out the door.
can anyone verify this or does anyone have any definitive knowledge about this (hopefully) urban legend? another site (some realtor's blog) said that the "exit tax" is only imposed if the cap gain on the property is subject to cap gains tax on the federal level. man this is confusing.
