Why are taxes of any kind a dreaded topic? It’s a fact of life, one of those things we can count on as a certainty. So let’s try and understand the most common tax questions that come up in a property transaction. It’s also important to follow the law regarding federal capital gains taxes when selling a house.
If you’re considering selling your home in New Jersey for cash, this article will tell you what you need to know. Property taxes are high, home prices and mortgage rates are up, inflation is insane and people everywhere are struggling.
It’s making more sense to home sellers to sell to a cash buyer, for multiple reasons. Get a free cash offer with no further obligation at NJ Cash Buyers.
Capital Gains Tax
When you sell a home in New Jersey, especially if you sell for cash, you may owe state and federal capital gains taxes. A capital gain is considered the amount of profit you make when you sell a property for more than you paid for it. This profit is subject to both state and federal capital gains taxes, and the tax rate you’ll pay is determined by your income and filing status.
In New Jersey, all capital gains are treated like regular income. According to SmartAsset, in 2025, the capital gain NJ state taxes is 10.75%. State capital gain tax is paid when filing your state income tax return. You simply add it to your adjusted gross income.
At the federal level, the long term capital gain rate is either 0%, 15%, or 20%. Long term capital gain is considered when you own a house for one year or more and sell it. Short term capital gain is when you sell a house you’ve owned for less than a year.
Reduce or Eliminate Capital Gains Tax
If you’re selling a house for cash and you don’t want to owe capital gains tax, here’s what you need to know. For single filers and people married but filing separately, they can exclude the first $250,000 of the profit. For married couples filing jointly, they are exempt for the first $500,000 of their gains.
To qualify for this exemption, you must meet the following criteria. First, it must be your principal residence for at least two of the last five years. To be the primary residence, you need to have lived in the house full time for those two years. You also can’t have sold a second home in the two years prior to the current sale. You can only claim the exemption once every two years.
New Jersey Exit Tax
Another important tax to keep in mind when selling your house is called the exit tax. This tax only applies, however, if you’re moving out of the state of New Jersey when you sell. This tax was enacted as law in 2004, and is really only a payment towards your estimated tax bill for selling your house.
This payment is held at closing until after filing your New Jersey tax return at the end of the year. The estimated tax held is applied to the capital gains tax you end up owing for selling your house. If you don’t owe taxes or are exempt from this tax, the money will be returned. Even if you sell at a loss, the seller is still required to pay 2% of the sale price at closing.
New Jersey Transfer Tax
The state of New Jersey also requires a tax when selling real estate and owners change hands, called the Realty Transfer Tax (RTT). A tax of 1% of the sale price is typically the amount paid.
This is the cost of transferring ownership when selling property in NJ. It’s one of the fees every home seller must pay, the only partial exemptions available are for seniors, those with disabilities, and low or moderate income households.
About New Jersey Property Taxes
It’s no secret that NJ has some of the highest property taxes in the country. But New Jersey residents should keep in mind that these taxes are how local governments fund public services. For example, many educational programs in schools are dependent upon property taxes. Low income housing is partially paid for through taxes like these.
Reduction in Taxes
It’s also good to know that there are significant tax reductions available to New Jersey residents who qualify. For the majority of these taxes, if you’re a senior citizen or disabled, you pay significantly less. If you’re a home seller with low or moderate income, you may qualify for a cost reduction in these taxes. Check with a tax professional when filing at the end of the year.
Selling Your New Jersey Home for Cash
If you’re thinking of selling your home in New Jersey for cash, this means you’ll pay less fees when you sell. For instance, at NJ Cash Buyers, there are no closing costs or realtor commissions. There is no cost for our services, and you can get a free, all cash offer with no further obligation.
Why not avoid the entire traditional sale process with a cash sale, and have the money in as little as 7 days? Sell your home much faster, and avoid the hassles that come with a regular home sale. Plus, we buy houses in any condition, no inspections required. When you need to sell fast in NJ, we buy houses as-is, for a fair, all-cash offer.