Short answer
For the sale itself, yes. The Division of Taxation says New Jersey residents who sell their New Jersey home and move outside the state are considered nonresidents for purposes of that sale. New Jersey may require an estimated tax payment at closing, and the seller files a nonresident return to report the gain or loss.
The Division's rule
The tax guide states that New Jersey residents who sell their New Jersey home and move outside of the state are considered nonresidents for the purpose of the sale. It says New Jersey may require an estimated tax payment at closing, and the seller will need to file a nonresident tax return to report any gain or loss. A person who stays in New Jersey after the sale is a resident for this purpose.
How the definitions read
The glossary defines a resident taxpayer as someone who is, and intends to continue to be, maintaining a permanent residence in New Jersey on or after the day of transfer. A nonresident is anyone who maintains a permanent residence outside New Jersey, including those who sold their New Jersey residence and moved outside the state during the tax year. So where you plan to live on closing day matters, not where you lived all year.
The principal residence exclusion can remove the payment
A nonresident seller who claims the principal residence exclusion can use the GIT/REP-3 exemption and skip the estimated payment at closing, according to the guide. To qualify for that exclusion, the guide lists an ownership test of two or more years in the last five, a use test of two or more years in the last five, and a rule that you did not exclude gain on another home during the prior two years. Ask a tax professional whether you pass.
Where to report it
The guide says a nonresident reports gain on Part I of the NJ-1040-NR as Net Gains or Income From Disposition of Property, and enters any estimated payment made at closing on the Estimated Payment/Credit line, not as New Jersey Income Tax Withholdings. Keep the closing statement and the stamped GIT/REP form. They are your proof if there is a question later.
Moving on quickly
If you are relocating, you may want a firm closing date. Kaizen Home Buyers makes cash offers on New Jersey houses as-is, with no repairs and no agent commission. We can give an offer within 24 hours and close in 14 to 30 days or on the date you choose. Call 267-329-0084. A listing with an agent can take longer but may bring a higher price. Tell the closing attorney early that you are moving out of state.