How do I go about recovering NJ capital gains tax paid when I sold my house in NJ (my primary residence) and moved out of state (to PA)? At the closing of my house sale in NJ I had to pay 2% of the total sale price to the State of NJ (estimated capital gains tax), with the understanding that , if I qualified , I could recover some or all of that payment by filing a NJ non-resident return. One of those qualifications is if I met the criteria for the Federal section 121 exclusion, which I did. The problem is that nowhere in the NJ return was there a place for me to enter estimated taxes I had already paid up front. The only mention of the property sale in the NJ interview is in the "Disposition of Property" field - one line has the sale of the property with the actual capital gain (pulled from the Federal interview) and the next line says 'Section 121 exclusion' with the same capital gain but with a minus (-) in front of it, effectively cancelling out the capital gain and saying I owe no taxes for the house sale. But again - there is nowhere in the interview for me to enter estimated taxes already paid, so I can recover what I already paid.
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At closing you should have received an NJ Estimated Tax receipt for the amount from your attorney.
A lot of attorneys don't know how to handle this correctly.
In any case you would file the amount as an NJ estimated tax payment Line 56, since you paid it.
you might want to discuss with your attorney before filing.
Enter your New jersey withholding in Deductions & Credits. The amount will transfer to your NJ nonresident income tax return.
Here's how to do it:
The post includes a link to an article about the exit tax: Where do I enter the exit tax paid to NJ when I sold my rental condo in 2016. I lived in that condo...
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