NJ Exit Tax Calculator 2026 β Non-Resident Real Estate Withholding (GIT/REP)
Calculate New Jersey non-resident real estate withholding: 10.75% of gain vs 2% of gross sale price. Find your best election, estimate refund, and compare both methods side-by-side.
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Additions, renovations β not maintenance/repairs $
Commissions, legal, transfer tax, closing costs Your NJ effective rate for final tax filing
Examples:
$0
Recommended Withholding
$0
Net Gain on Sale
$0
Method 1 (10.75% of Gain)
$0
Method 2 (2% of Gross)
NJ Withholding Calculation
How NJ Non-Resident Withholding Works
New Jersey requires non-resident sellers to prepay income tax at closing to prevent tax avoidance by out-of-state sellers. The withholding forms (GIT/REP-1 through -3) are filed with the county clerk at closing.
Two Method Formula
Method 1 β 10.75% of Gain:
Net Gain = Sale Price β Adjusted Basis β Selling Costs
Withholding = Net Gain Γ 10.75%
Method 2 β 2% of Gross:
Withholding = Sale Price Γ 2%
Choose whichever results in lower withholding (or is legally required).
Final NJ Tax vs Withholding
If your actual NJ marginal rate (6.37%) < 10.75% withholding rate:
You will receive a refund when you file your NJ-1040NR.
Refund = (10.75% β 6.37%) Γ Net Gain (approx.)
You will receive a refund when you file your NJ-1040NR.
Refund = (10.75% β 6.37%) Γ Net Gain (approx.)
Extended
Side-by-Side Method Comparison + Installment Sale Calculator
10.75% gain method vs 2% gross method with refund estimation and installment sale year-by-year withholding
Side-by-side comparison of both withholding methods with estimated refund after filing NJ-1040NR.
Method 1 (10.75% of gain)
Method 2 (2% of gross)
Actual NJ Tax (at your rate)
| Item | Method 1 (10.75% Γ Gain) | Method 2 (2% Γ Gross) |
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For installment sales, each payment may require separate withholding. Configure the payment schedule below.
% received at closing (balance spread over installment years)
| Year | Payment Received | Gain Portion | 10.75% Withholding | 2% Withholding | Recommended |
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Frequently Asked Questions
What is the New Jersey Exit Tax?
The "NJ Exit Tax" is actually NJ non-resident real estate withholding under the Gross Income Tax Act. When a non-resident seller closes on a NJ property, they must prepay NJ income tax at closing via Form GIT/REP-3. The withholding is calculated as: 10.75% of the gain on sale OR 2% of the total gross sale price β whichever the taxpayer elects. The final NJ tax is determined when the seller files a NJ-1040NR or NJ-1040C (composite) return. The withholding is a deposit against the actual tax liability, not necessarily the final tax owed.
Who must pay the NJ Exit Tax withholding?
Non-residents who sell New Jersey real property must comply with GIT/REP withholding. A "non-resident" for this purpose means anyone who is not a NJ resident at the time of closing. If you lived in NJ when you bought the property but moved away before selling, you are a non-resident seller and must use the withholding forms. NJ residents who sell NJ property are exempt from this withholding (they report on their regular NJ-1040). An LLC or corporation selling NJ real estate must also comply if any members/shareholders are NJ non-residents.
How do I choose between the 10.75% of gain vs 2% of gross sale price?
You elect your method on Form GIT/REP-3 at closing. The 10.75%-of-gain method is usually better when: (1) Your gain is small relative to the sale price (e.g., you paid close to your sale price), or (2) You have large selling costs and capital improvements that reduce the gain significantly. The 2%-of-gross method may be better when: you have a large gain and the 2% withholding amount is less than 10.75% Γ gain. Use this calculator to see which method results in lower withholding. Remember: this is just a prepayment β your actual NJ tax may be higher or lower when you file your return, resulting in either a refund or additional payment.
Can I get a refund of NJ exit tax withholding?
Yes. The withholding at closing is a prepayment of your NJ income tax liability. When you file your NJ non-resident return (NJ-1040NR) for the year of the sale, your actual NJ income tax on the gain is calculated at NJ's graduated rates (1.4%β10.75%). If the withholding exceeds your actual tax liability, you receive a refund. For example, if you withheld at 10.75% but your actual NJ marginal rate on this gain is 6.37%, you would receive a significant refund. Most sellers who elect the 10.75%-of-gain method and have modest other NJ income will receive a partial refund after filing.
What selling costs can reduce the gain for the 10.75% calculation?
Your "gain" for NJ GIT/REP purposes is sale price minus adjusted basis. Your adjusted basis includes: (1) Original purchase price, (2) Capital improvements (additions, renovations β not maintenance/repairs), (3) Selling costs (commissions, legal fees, transfer taxes, closing costs). The selling costs are subtracted from the sale price (or added to basis) to arrive at the amount realized. Depreciation previously taken on the property (if used for rental or business) must be recaptured at ordinary income rates before computing the remaining capital gain. NJ has its own basis rules that may differ slightly from federal.