NJ Tax Obligations of Foreign and Non-Resident Property Owners

Questions (Short Hills Realtor): My clients are living abroad and considering selling their home in New Jersey which is currently leased. If they sell, are their non-resident tax implications?

Answer: If the client is a US Citizen livign abroad (or even out of state), then the only withholding is NJ non-resident withholding which is 2% of the purchase price. If the person is not a US citizen, then the following rule also applies and 10% of the purchase price must be sent to the IRS:

“You (the transferee) acquire the property for use as a home and the amount realized (generally sales price) is not more than $300,000. You or a member of your family must have definite plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first two 12-month periods following the date of transfer. When counting the number of days the property is used, do not count the days the property will be vacant.”

There are several exceptions to both withholding requirements so all situations should be directed to one of our attorneys to answer specifics.