Triple Play is a weekly NJBIZ feature that asks top executives in New Jersey to talk about three things related to their industry.
Roy I. Levine is a senior member at Levine, Jacobs & Company LLC, a leading accounting firm in Livingston.
We asked Roy to explain the “exit tax” and the impact it may have on New Jerseyans.
What an exit tax really is, is a misunderstood rule — when a person sells a residence/home, New Jersey withholds either 8.97 percent of the actual net profit, or 2 percent of the selling price, whichever is higher, and records it as an estimate toward state income tax.
It’s important for people to understand when they are still considered a ‘New Jersey resident,’ and what the tax consequences are if they want to move or sell. If they spend a majority of days in New Jersey over other states, but not 183 days — they could still be construed as New Jersey residents, even though they might have filed for residency in another state or for a license change, etc.
Every home sale in the state is subject to a realty transfer tax, which is roughly 1 percent of the selling price. There is also the ‘Millionaire’s Tax,’ which deducts another 1 percent off the sales price, but it’s paid by the purchaser, not the seller.