NJ Exit Tax Non-Resident Real Estate 2026 Calculator
New Jersey's "exit tax" is a non-resident seller withholding — the greater of 8.97% of estimated gain OR 2% of total sale price. Reported on Form GIT/REP-3 at closing. It is a prepayment, not an extra tax, and is refundable after filing NJ-1040NR.
| Sale price | — |
| Adjusted basis | — |
| Selling costs | — |
| Section 121 exclusion | — |
| Taxable gain | — |
| Method A: 8.97% of gain | — |
| Method B: 2% of sale price (minimum) | — |
| Withholding required at closing | — |
New Jersey's "exit tax" is actually a non-resident seller withholding — the greater of 8.97% of estimated gain OR 2% of total sale price. It is collected on Form GIT/REP-3 at closing and remitted to the NJ Division of Taxation. The tax is a prepayment, not an additional tax: you reconcile (and often recover) it when you file Form NJ-1040NR after year-end.
Who Owes the NJ Exit Tax
The withholding applies to non-residents selling NJ real property and former residents moving out of NJ at the time of sale. NJ residents who remain residents do NOT pay exit tax — they report the gain on their normal NJ-1040. The withholding is required regardless of whether the sale produces a gain or loss. Even loss-making sales trigger the 2% of sale price minimum unless an exemption applies.
How the Withholding Is Calculated
Per N.J.S.A. 54A:8-9, withholding equals the greater of: (A) 8.97% of estimated net gain, or (B) 2% of total consideration (sale price). The 8.97% rate is the top NJ Gross Income Tax marginal rate. If you exclude gain under IRC §121 (primary residence exclusion: $250K single / $500K MFJ), you can reduce method A — but method B (2% of sale price) still applies as a floor. Form GIT/REP-1 or GIT/REP-2 can claim full exemption (e.g., Section 121 exclusion covers entire gain).
Getting Your Money Back
The exit tax is a prepayment against your actual NJ tax liability. After year-end, file Form NJ-1040NR (Non-Resident Return). If your actual NJ tax on the gain is less than what was withheld, you get a refund — typically within 6-12 weeks. Most non-residents recover 70-90% of the exit tax because their actual marginal rate is lower than 8.97% or the gain is exempted under §121. Keep all closing documents and basis records.
Exemptions and Form GIT/REP-3
You can avoid the exit tax by filing the right form: GIT/REP-3 (declaration that the transaction qualifies for full exemption — Section 121 primary residence exclusion, 1031 exchange, gift, transfer between spouses, or NJ resident seller). GIT/REP-1 is filed by the buyer when no withholding is required. GIT/REP-2 is for installment sales. Have your attorney file the correct form at closing — once withheld, recovery requires a return filing.
Last updated May 2026. Sources: NJ Division of Taxation, N.J.S.A. 54A:8-9, IRC §121.