Taxes on sale of Home (Livingston, Millburn: real estate, 2009, rental)

[SUSJOS]

I know there is capital gain tax on gains of over $250K single and $500 married on the federal side. Is there also a tax for the gain to be paid to the State?

[solibs]

most states have a real estate transfer tax. NJ is no exception. I think it's 2% but someone else should correct me if i'm wrong.

[luckyshoes]

Originally Posted by solibs

most states have a real estate transfer tax. NJ is no exception. I think it's 2% but someone else should correct me if i'm wrong.

It's progressive, looks like about 1% roughly.

Short Hills, Millburn, Livingston, New Jersey and Midtown Direct Real Estate, Home Buying and Selling, Top Realtor » New Jersey Home Seller’s Realty Transfer Fee (RTF)

[thesnowapefamily]

One percent.

[MaverickDD]

Originally Posted by SUSJOS

I know there is capital gain tax on gains of over $250K single and $500 married on the federal side. Is there also a tax for the gain to be paid to the State?

Regarding income tax,

New Jersey follows the same rule as the Fed: $250,000 tax-free for singles, $500,000 tax-free for couples.

Pennsylvania does not follow the same exemption rule. If you're moving to PA, get yourself some serious income tax advice because depending on the precise timing, PA may be able to tax you on the sale of your Jersey residence! Be careful.

[SUSJOS]

I am talking about a 2 family home 50% our principal residence and 50% rental property therefore I know we will be responsible to pay taxes on half of the gain after expenses. What I was trying to figure out is what is the rate for NJ. 2%???

[MaverickDD]

Originally Posted by SUSJOS

I am talking about a 2 family home 50% our principal residence and 50% rental property therefore I know we will be responsible to pay taxes on half of the gain after expenses. What I was trying to figure out is what is the rate for NJ. 2%???

The amount of income tax you'll be charged on the half of your home which is not your residence is determined by the tax rate schedules below. Add the gain on the sale of the business half of your home to your wages and other income. Then use the charts below.

New Jersey Tax Rate Schedules 2008

Table A for FILING STATUS: Single, Married filing separate return

If Taxable Income (Line 37) is:
Over......... But not over.............................................. ....................................... Your Tax
$ 0---------- $ 20,000 __________ x.01400 = __________ – ..............$ 0 = _________
$ 20,000--- $ 35,000 __________ x.01750 = __________ – .......$ 70.00 = _________
$ 35,000--- $ 40,000 __________ x.03500 = __________ – .....$ 682.50 = _________
$ 40,000--- $ 75,000 __________ x.05525 = __________ – ..$ 1,492.50 = _________
$ 75,000-- $500,000 __________ x.06370 = __________ – ..$ 2,126.25 = _________
$ 500,000 and over __________ x.08970 = __________ – $ 15,126.25 = _________


Table B for FILING STATUS: Married filing joint return, Head of household, Qualifying widow(er)

If Taxable Income (Line 37) is:
Over........ But not over.............................................. ..................................... Your Tax
$ 0 ---------$ 20,000 __________ x.01400 = __________ – .............$ 0 = _________
$ 20,000-- $ 50,000 __________ x.01750 = __________ – .......$ 70.00 = _________
$ 50,000-- $ 70,000 __________ x.02450 = __________ – .....$ 420.00 = _________
$ 70,000-- $ 80,000 __________ x.03500 = __________ – ..$ 1,154.50 = _________
$ 80,000--$150,000 __________ x.05525 = __________ – ..$ 2,775.00 = _________
$150,000-$500,000 __________ x.06370 = __________ – ..$ 4,042.50 = _________
$500,000 and over __________ x.08970 = __________ – $ 17,042.50 = _________

Noteworthy: For 2009, a new top rate kicks in for income over $1,000,000 of 10.75%!
This tax foundation link provides a lot of data about New Jersey taxes: The Tax Foundation - Tax Research Areas > New Jersey

As you can see from the charts, depending upon your total income including income from other sources, the gain on the sale of the business half of your home may be taxed by New Jersey at a rate ranging from 1.4% to 10.75%