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)
Tax professionals emphasize that the "NJ Exit Tax" is technically a mandatory withholding, but for sellers moving out of state, it represents a massive liquidity hit at closing. CPAs advise that New Jersey requires non-resident sellers to prepay estimated income tax on the gain from the sale.
Based on state tax code, the withholding is typically calculated as the greater of:
1. 8.97% of the net gain on the sale, OR
2. 2% of the total sale price.
While tax counsel notes you may get a refund when you file your return, the state holds your capital interest-free for months.
The sequencing of your real estate transaction is a major tax event. Because establishing Florida residency before you sell your NJ home triggers this non-resident withholding, tax advisors often strategize with clients on the exact timing of the closing table. We coordinate your Florida real estate acquisition precisely alongside the timeline set by your CPA.
2. The Inheritance Tax Trap
Estate attorneys frequently warn high-net-worth clients that New Jersey is one of only six states that still imposes an Inheritance Tax. While transfers to a spouse or child (Class A) are generally exempt, legal counsel highlights that transfers to siblings (Class C) or friends/nieces (Class D) are heavily taxed.
If you leave assets to a brother or sister, estate planners note the tax rate ranges from 11% to 16% on amounts over $25,000. Florida has NO Inheritance Tax. We secure the exact real estate assets required to support the domicile and wealth preservation strategies drafted by your estate planner.
3. The "Permanent Place of Abode"
Similar to New York, New Jersey tax law defines a "Statutory Resident" as anyone who maintains a permanent place of abode in the state and spends more than 183 days there.
The friction lies in the state's definition of "Abode." Tax professionals caution that if you keep a shore house winterized and habitable year-round, the Division of Taxation may argue it is a permanent abode. CPAs strictly advise their clients to ensure their Florida presence is definitively documented and their NJ days are meticulously tracked below the threshold.
4. The Standard CPA Domicile Checklist
Execute the Strategy
Connect with a Relocation Specialist to view "Domicile-Ready" inventory in Lakewood Ranch.