THE NEW JERSEY EXIT STRATEGY
A Tactical Guide to the NJ Exit Tax, Inheritance Tax, and Florida Domicile.
1. The "Exit Tax" (GIT/REP-3)
The "NJ Exit Tax" is technically a mandatory withholding, but for sellers moving out of state, it represents a massive liquidity hit at closing. New Jersey requires non-resident sellers to prepay estimated income tax on the gain from the sale.
The withholding is calculated as the greater of:
1. 8.97% of the net gain on the sale, OR
2. 2% of the total sale price.
While you may get a refund when you file your return, the state holds your capital interest-free for months.
If you establish Florida residency before you sell your NJ home, you are considered a "non-resident" and must pay the withholding. Some clients choose to remain NJ residents until the closing table to avoid this specific withholding, though this exposes other income to NJ tax. Consult your CPA on the timing.
2. The Inheritance Tax Trap
New Jersey is one of only six states that still imposes an Inheritance Tax. While transfers to a spouse or child (Class A) are exempt, transfers to siblings (Class C) or friends/nieces (Class D) are heavily taxed.
If you leave assets to a brother or sister, the tax rate ranges from 11% to 16% on amounts over $25,000. Florida has NO Inheritance Tax. By changing your domicile, you protect your siblings and extended family from this state-level confiscation.
3. The "Permanent Place of Abode"
Like New York, New Jersey defines a "Statutory Resident" as anyone who maintains a permanent place of abode in the state and spends more than 183 days there.
The danger lies in the definition of "Abode." If you keep a shore house winterized and habitable year-round, the Division of Taxation may argue it is a permanent abode. To be safe, ensure your Florida presence is documented and your NJ days are strictly tracked below the threshold.
4. The Domicile Checklist
Execute the Strategy
Connect with a Relocation Specialist to view "Domicile-Ready" inventory in Lakewood Ranch.