Did you know that selling your home in New Jersey differs in many ways from other states? In this episode of Monmouth Redefined, I’m going to walk you through three things you must know before selling your New Jersey home. We’ll look at everything from taxes and inspections to closing so you can enjoy a smooth selling process.
The New Jersey Transfer Tax
If you are selling your home here in New Jersey, there are certain things that you must know. Number one is the taxes that go along with selling your home. It’s no secret: we all know how New Jersey loves their taxes.
When you sell your home, the state has what is called the New Jersey transfer tax. This is a tax that is paid by the seller at the time of closing for the transfer of your property to the new buyer. You can plan on paying around 1% of the sale price of your home. However, there are a few exemptions and partial exemptions.
For example, if you’re selling your home to another family member, you may qualify for an exemption from this tax. If you are aged 62 or older, disabled, or a veteran, then you will qualify for a partial exemption.
The “Exit Tax”
There is a lot of confusion around taxes here in New Jersey when selling your home. One of those misconceptions that everyone seems to think or talk about is an exit tax. When I have sellers moving out of state, many times they will ask me if they have to pay the exit tax.
There is a lot of misunderstanding around this, so let me give you some good news: there is no new or extra tax here in New Jersey when it comes to selling your house. This tax is actually a prepayment of the estimated tax on the sale of your home.
The reason New Jersey does this is that years ago, people were moving out of state and not filing a return to report the sale of their home. In 2004, they made this new rule that the seller pays the estimated tax on the sale of their home before the deed gets recorded. It’s taken out at the time of closing and sent to New Jersey.
Once you have moved to your new state, you can file a non-resident income tax return. If you have an overpayment, it will be sent back to you. Also if the home you sold was your primary residence, you will qualify for the exemption of capital gains. There is a way you can get your money back sooner if you do have an overpayment; simply fill out form A-3128 so you don’t have to wait for your money until you file your tax returns.
The second thing you need to know is that there are inspections that you as the seller are responsible for from your township and certificates that you must obtain from your township to sell your home. What is actually required varies from town to town.
In some towns it’s very simple; they only require a smoke and fire CCO. This is them coming in and ensuring that you have the correct fire extinguisher located in the right place and that you have the right number of smoke and carbon monoxide detectors. They’ll also ensure that they’re all functioning and working properly.
On Or About
Here in New Jersey, every closing date is “on or about.” What does that mean to you? It means that the date that’s on your sales contract isn’t necessarily the date that you’re going to close on. The date on your contract is the estimated date and, although everyone involved does their best to try to stick to that date, delays can happen.
As you now know, some towns require numerous inspections that can delay the closing. Additionally, the buyer’s mortgage could be delayed, or maybe the title work isn’t in. There are numerous factors that could end up delaying your closing. Before you go out and rush to book movers and make arrangements, make sure you communicate with your realtor and attorney so that you understand and know the actual date you will be closing on.
Unfortunately, because there are so many moving parts, the actual date of closing isn’t typically set until toward the end of the transaction. I am just warning you now that it can get stressful.
Closing And The Buyer’s Walkthrough
The other thing you need to know about is that when you close on your home, you need to be out. Additionally, everything in your house needs to be out. I know it’s different in other states; some allow the home to close with the sellers allowed to stay for a certain timeframe.
Here in New Jersey, unless you’ve negotiated that upfront or during attorney review, then you need to have your home ready on the day of closing. And honestly, this is true not even just on the day of closing. You also want to be ready for the buyer’s walkthrough. When the buyer does their walkthrough, your home needs to be broom swept and in good condition.
The buyer typically does their walkthrough either the day prior or the day of closing. If the buyers come to do the walkthrough and you as a seller aren’t prepared, then numerous things can happen. It can delay the closing, or they can request to hold money in escrow. I’ve seen it all; I’ve even seen closings not take place because the seller was not prepared.
Please make sure you discuss this with your realtor, attorney, or whoever is representing you. This will ensure that you have a smooth and successful closing day.
Successfully Selling Your Home
These are the three things you must know when it comes to selling your home here in the Garden State. If you live here and think that I forgot something, then of course, please feel free to comment down below. I hope I was able to provide insight into the home-selling process here in New Jersey.
Don’t forget to tap the bell and hit the subscribe button so you’re notified the next time I upload new video content. Stay tuned to the next episode of Monmouth Redefined, where I talk about anything and everything related to living here in Monmouth County. See you next time!