Sold my (not principal) home in NJ in 2021, paid NJ-1040ES, have no capital gain nor income from NJ, what tax form do I need to file to get estimated tax back?

[Spring5]

I paid GIT/REP-1 (NJ-1040ES) in 2021 as nonresident seller of my NJ home (not principal residence at the time, but lived there for more than 10 years and owned for more than 15 years), have capital loss & no earned income from NJ.  What tax forms do I need to file to get estimated tax back?  Since I don't have any capital gain nor income from NJ, do I have to file NJ-1040-NR? I read other posts and it seems to be pointing towards Form NJ-1040-NR or Form A-3128.  I thank you in advance for your answers.

[ErnieS0 · Accepted solution]

Yes file a New Jersey nonresident return (Form NJ-1040NJ) to get a refund back on your "New Jersey Exit Tax."

New Jersey says: Nonresidents must complete Part I of the NJ-1040-NR and report any gain from the sale of
New Jersey property as Net Gains or Income From Disposition of Property (if loss, enter 0).
Report any estimated tax payment paid at closing on the Estimated Payment/Credit line. Do
not report the estimated payment as New Jersey Income Tax Withholdings. 

Buying and Selling a Home in New Jersey

[Spring5]

Hi Ernie,

Thank you for your reply, I appreciate you taking time to answer my question.  Would you know anything about Form A-3128? Do I have choice of filing form NJ-1040NJ or form A-3128?   I presume I can file state tax for the state where I live now and NJ state tax (NJ-1040-NR) via Turbo Tax at one-shot?  Do I need to file one paticular state first or does it not matter?  Again, thank you for responding to my question. 

[DaveF1006]

To clarify, are you filing your federal tax return with Turbo Tax? If not, then file A-3128 as it is a Claim for Refund of the Estimated Gross Income Tax Payment for the Sale of New Jersey Real Estate. 

if you are filing your federal return, then file a New Jersey non -resident state return to receive back a refund for the estimate taxes paid. I suggest this method because the returns can be filed electronically.  

@Spring5

[Spring5]

Hi Dave,

Thank you for responding to my question. I’m filing both the state and federal tax return with Turbo Tax.  Your advice does make sense; I will file NJ non-resident state tax return (NJ-1040-NR) along with federal and my current state tax return electronically. Can I file state tax for the state where I live now and NJ state tax (NJ-1040-NR) via Turbo Tax at one-shot?  If yes, do I need to file them in any particular order?  Again, thank you for responding to my question. 

[RobertB4444]

You can file them all in one shot.  We always recommend preparing the non-resident return first in case a tax credit is generated for the state where you live.

[Spring5]

Hi Robert,

Thank you for your answer - I appreciate it.

[Spring5]

I have a related but different question.  In Federal return, I have reported this sale in “Stocks, Mutual Funds, Bonds, Other” under “Investment Income (1099-B or broker statements)” section. The gross proceeds reflect the sale price of home but does not reflect real estate commission & legal fees and expenses; should these expenses be reported in “The reported sales price did not deduct all fees or selling expenses?”  I did not received any tax forms for this sale and have capital loss from this sale.  I presume there would be something similar in the NJ-1040-NR form as well? Thank you in advance for your answer.   

[ErnieS0]

Yes. you can claim sales expenses. They will be on your settlement statement. You will not receive a tax form. The only tax form sent with a home sale is a 1099-S that lists the gross proceeds, and most times, you will not receive that form.

Losses on the sale of personal property are not deductible. You can deduct a loss on the home sale if it is investment property.

Your net capital gain or loss will transfer to your New Jersey return. New Jersey does not allow a deduction for a capital loss. They can only be netted against capital gains. If yo have a net capital loss, it will not show on your NJ return.

[Spring5]

Hi Ernie,

Thank you again for answering my question, I’m very grateful for your answer.

In 2021, I sold my NJ home that used to be my principal residence. Before selling my NJ home, I moved to different state for a job, and ended up buying a home in that state. I was planning to rent out my NJ home, but due to pandemic, I was not able to rent it out and finally decided to sell it last year. Would this be considered an investment property?  I sold this home for less than what I paid for; would this be considered a capital loss?  And I owned this home for more than 15 years.

I had to contact the title company that prepared the settlement statement to get the 1099-S which has just the “Gross proceeds” indicating the sale price. The settlement statement has column with “Debit” for seller with commissions for realtors, legal fees and expenses, out of state tax(2%) to NJ and transfer tax to county recording office. Can I claim all these as sales expenses in “The reported sales price did not deduct all fees or selling expenses” in “Investment Income” in the Federal return?  If not here, where would I claim these sales expenses?   

Thanks again for your answers, I appreciate it.

[ErnieS0]

Generally, investments are things you hold in the hope they will appreciate in value. Every case if different.

My opinion is that your home is not an investment property because you sold at a loss and sold fairly quickly for a loss. Covid-19 is an extenuating circumstance. You can argue you were planning to hold it for investment, but due circumstances were forced to sell.

You can take expenses on your settlement state except for taxes and mortgage interest. They are reported separately.

You would claim those by saying yes the reported sales price did not deduct all fees or selling expenses and enter the total.

[Spring5]

Hi Ernie,

Thank you for your reply.  I’m not sure what you mean by selling my home fairly quickly for a loss, but I bought a home in the state that I live in now in Late 2019; went to NJ in March of 2020 to work on repair of my home, but NJ governor declared pandemic and started the travel restrictions and quarantine period for out of state travelers; soon the state that I moved to did the same, so I was forced to comeback.  In summer of 2021, I went to my NJ home to finish the repair and sold it; thus it was vacant for about a year and a half.

This is my first time selling a home, and you seem to know a lot about tax for sold homes, so I will follow your opinion and not report the sold home as an investment property and just claim expenses on my settlement for commissions for realtors, legal fees and legal expenses, but not the tax or interest. However when I removed the NJ sold home as an investment, I no longer have place to claim expenses on my settlement in Federal  in Turbo Tax, for “The reported sales price did not deduct all fees or selling expenses” was in “Investment Income” in the Federal return.  So in which section in Turbo Tax would I claim expenses on my settlement for Federal return?  I haven’t started the state return yet, but I presume I may have the same problem there as well.  Thanks again for your reply and explaining the tax related to selling a home.     

[ErnieS0]

If you sold your home as a loss without your expenses, then you do not need to add them. A personal loss is not deductible so making a bigger loss will not impact your taxes.

My opinion of whether your sale is an investment or personal sale is my opinion based on the limited facts you presented.

You can take a more aggressive tax positive and report it as an investment sale. Or you can speak with someone in your area to discuss the circumstances more fully.

[Spring5]

Hi Ernie,

Thank you for your reply over the weekend, and I apologize for my late reply.

I went to IRS web site and did some looking around and the Publication 544 seems to confirm your answer; I removed all forms that I filled out for the loss from the sale of my second home.  Thanks for your help!

Take care.