The “NJ exit tax” is not a separate tax; it is an estimated New Jersey Gross Income Tax payment that nonresident sellers make at closing, equal to 10.75% of the gain or 2% of the sale price, whichever is larger. Most or all of it can come back if your real tax turns out lower. Residents (judged on the closing date) and sellers who qualify for an exemption, such as the principal-residence box, pay nothing at closing.
Key takeaways
- The payment applies to nonresident individuals, estates and trusts who sell New Jersey real estate. The county clerk won’t record the deed until it’s paid or an exemption is certified.
- Residency is judged on the closing date. If you’re still a New Jersey resident that day, you check box 1 on the GIT/REP-3 and pay nothing at closing, even if you move out soon after.
- A nonresident selling a home that qualifies as a principal residence under federal tax rules can check box 2 and also pay $0 at closing.
- Not sure if you’d owe 10.75% of your gain or the 2% minimum? The three worked examples below run the numbers on a $400,000 sale.
This article is general information, not tax or legal advice. Talk to a New Jersey CPA or real estate attorney about your sale.
What the “exit tax” actually is
People call it an exit tax because it falls on sellers who are leaving New Jersey or have already left. On paper, it’s an estimated payment toward the New Jersey Gross Income Tax on the gain from selling New Jersey real estate. The state collects it when the deed is recorded.
The real tax is worked out later on the New Jersey nonresident return, the NJ-1040-NR. If the estimate was too high, you get the difference back as a credit or refund.
Every seller has to give the county clerk a GIT/REP form before the deed can be recorded, whether or not they live in New Jersey. Which form you use depends on where you live and whether an exemption applies. (Our guide to selling a house in New Jersey covers the rest of the closing paperwork.) According to the Division of Taxation’s GIT/REP frequently asked questions, only sheriff’s deeds in foreclosure and bankruptcy trustee’s deeds need no form at all. Life estate holders still have to file one.
Residency and the closing date
This is the part that trips people up. What counts is where you live on the day you close.
The Division’s Technical Bulletin TB-57(R), revised June 15, 2026, gives an example. Mary sells her New Jersey primary residence in April, and her deed is recorded in May. She was still a New Jersey resident at closing, so she can certify residency under box 1, even though she becomes a nonresident afterward.
If the order is reversed, so is the answer. If you’ve already become a resident of another state before closing, you’re a nonresident for GIT/REP purposes. The GIT/REP-1 instructions also treat part-year residents as nonresidents.
Residents who check box 1 make no estimated payment at closing. They still report any gain on their regular NJ-1040.
The principal-residence exemption (box 2)
Box 2 is for sellers whose home meets the principal residence rules in Internal Revenue Code section 121, including the time-period requirement. Residents and nonresidents can both use it. So a seller who has already moved to Pennsylvania can still pay $0 at closing if the house qualifies.
The exclusion covers up to $250,000 of gain, or $500,000 for married couples filing jointly, if you owned the home and lived in it for 2 of the last 5 years. The Division’s NJIT10 guidance on selling a residence explains the ownership and use tests.
Two more details:
- You can check box 2 even if the form shows a “paper gain” based only on the sale price.
- If your gain turns out to be larger than the exclusion, you pay tax on the excess when you file your NJ-1040 or NJ-1040-NR. To pay some of it sooner, you can make an estimated payment online or with Form NJ-1040-ES after the deed is recorded. You don’t file a GIT/REP-1 at the county.
Exemptions on the GIT/REP-3
The GIT/REP-3 Seller’s Residency Certification/Exemption form lists 16 seller’s assurances. If any one of them applies, you make no estimated payment at closing. Boxes 2 through 16 work for residents and nonresidents. These are the ones that come up most in home sales:
- Box 2: the home was your principal residence under section 121.
- Box 3: the property goes to the lender in a foreclosure, including a deed in lieu of foreclosure.
- Box 7: a section 1031 like-kind exchange.
- Box 8: an executor or administrator transfers the property to an heir under the will or under intestacy law.
- Boxes 9 and 14: a lender-approved short sale with no net proceeds, or any sale where the seller gets no net proceeds.
- Box 11: a transfer to a relocation company.
- Box 12: a transfer between spouses or as part of a divorce.
Other boxes cover sellers that aren’t individuals, estates or trusts (such as corporations), deals of $1,000 or less, and deployed military service members. Read the form for the exact wording.
Which GIT/REP form do I file?
| Situation | Form | Paid at closing |
|---|---|---|
| NJ resident on closing date | GIT/REP-3, box 1 | $0 |
| Nonresident, home was your principal residence | GIT/REP-3, box 2 | $0 (NJ-1040-ES later if gain tops exclusion) |
| Nonresident selling a rental, second home or inherited home | GIT/REP-1 | Larger of 10.75% of gain or 2% of price |
| Nonresident who wants to pay ahead | GIT/REP-2 | Prepaid before closing |
| Other exemption (see list above) | GIT/REP-3, matching box | $0 |
| Not subject to payment, no other form fits | GIT/REP-4 waiver | $0 |
The GIT/REP-4 waiver needs approval before the deed goes to the county clerk. You email it with supporting documents to the Division’s GIT/REP Unit, and the original with the Division’s raised seal goes to the clerk. You can’t use it to get a refund.
How the estimated payment is calculated
The formula has two parts. Multiply your gain by 10.75%, the highest Gross Income Tax rate. Then figure 2% of the consideration. You pay the larger number.
The 2% is a minimum. If you have no gain at all, you still owe 2% unless an exemption applies. “Consideration” means the cash you receive plus any mortgage or lien the buyer takes over.
Example 1: gain above the minimum
Example only. Figures are rounded and come before any credits.
- Sale price: $400,000
- Adjusted basis plus selling costs: $300,000
- Gain: $100,000
- 10.75% of the gain: $10,750
- 2% of the price: $8,000
- Withheld at closing: $10,750, the larger figure
Example 2: the 2% minimum applies
Example only. Figures are rounded and come before any credits.
Same $400,000 sale, but the gain is only $30,000. 10.75% of that is $3,225. 2% of the price is still $8,000, so $8,000 is withheld. If the actual tax is lower, most of that money can come back through the NJ-1040-NR or Form A-3128.
Example 3: moved first, principal residence
Example only. Figures are rounded and come before any credits.
A married couple owned and lived in their Cherry Hill home for 10 years. They moved into a Pennsylvania home two months before the New Jersey closing, which makes them nonresidents on closing day. Their gain is $180,000, which is under the $500,000 joint exclusion. They check box 2 on the GIT/REP-3. Withheld: $0.
If they had still been New Jersey residents on closing day, box 1 would have worked too, just as in Mary’s case.
Co-owners. Each seller files separately, except that married couples and civil union partners who file jointly count as one owner. For tenants in common, the estimate is your ownership percentage times the gain times 10.75%, with a minimum of 2% of your share of the price.
How the payment is collected at closing
A nonresident gives the GIT/REP-1 and the estimated payment to the settlement agent at closing. That’s usually the buyer’s attorney or title company. The agent files the GIT/REP-1, the Realty Transfer Fee form and payment, and the deed with the county clerk. Without the right GIT/REP form and any payment due, the clerk can’t record the deed.
Another option is the GIT/REP-2. You prepay at a Division of Taxation Regional Information Center before closing and bring the stamped receipt with you.
This payment has nothing to do with your regular selling costs. The Realty Transfer Fee is a separate seller charge, covered in our NJ closing costs breakdown along with the buyer-side NJ mansion tax on $1 million-plus sales. Commission is another separate line, and we explain how much a realtor makes in NJ in its own post.
Getting the money back
There are two ways to get an overpayment back.
Claim it on your NJ-1040-NR. File the nonresident return for the year of the sale. The estimated payment counts as a credit against the tax you actually owe.
File Form A-3128 for an early refund. After the deed is recorded, file the A-3128 Claim for Refund with your Settlement Statement (HUD-1) or Closing Disclosure attached. Use it if you overpaid, or if you paid by mistake when an exemption applied. The form recalculates the tax on your net gain using a rate table.
TB-57(R) gives some timing guidance. A-3128 is the quicker route when you sell earlier in the year, but you still file the NJ-1040-NR. If you sell late in the year, many sellers just claim the excess on the NJ-1040-NR.
Paying the estimate doesn’t excuse you from filing the return.
Residents who were withheld on by mistake can claim the money back with Form A-3128, the NJ-1040 or the NJ-1040X, within the statute of limitations.
From contract to refund
- At listing or contract. Confirm where you’ll be a resident on closing day and whether the home counts as your section 121 principal residence. A good time to do this is while you fill out your New Jersey seller disclosure.
- Two or more weeks before closing, if your deal is complex. Contact the GIT/REP Unit at 609-322-9275 or [email protected]. The Division asks for at least two weeks’ notice.
- Before closing. Give the settlement agent the correct form.
- At closing. The agent takes the estimate out of your proceeds and sends it with the deed.
- After the deed is recorded. File Form A-3128 for an early refund, or wait and claim the credit on your NJ-1040-NR.
- At tax time. File the NJ-1040-NR, plus your new home state’s return.
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Frequently asked questions
Does New Jersey have an exit tax?
Not as a separate tax. “Exit tax” is a nickname for an estimated Gross Income Tax payment that nonresident sellers make when the deed is recorded. The real tax is worked out on the NJ-1040-NR, and any overpayment comes back. Sellers who are New Jersey residents on the closing date pay nothing at closing.
How much is withheld when I sell my house in NJ and move?
It depends on where you live on closing day. If you’re still a New Jersey resident, you check box 1 and nothing is withheld. If you’ve already moved, the estimate is 10.75% of your gain or 2% of the sale price, whichever is larger, unless an exemption such as box 2 applies.
Do I pay it if I sell my primary home?
Usually not at closing. If the home meets the section 121 principal residence rules, you can check box 2 on the GIT/REP-3, even as a nonresident. If your gain is more than the $250,000 exclusion ($500,000 for joint filers), you pay tax on the excess with your return, and you can make an NJ-1040-ES payment after recording if you’d like to pay sooner.
How do I get the 2% back?
You can claim it as a credit on your NJ-1040-NR for the year of the sale. For an early refund, file Form A-3128 after the deed is recorded and attach your settlement statement or Closing Disclosure. Either way, you still file the nonresident return.
Does it apply if I inherited the house?
If an executor or administrator transfers the house to an heir under the will or under intestacy law, box 8 on the GIT/REP-3 applies and no payment is due. If an heir or the estate later sells to an outside buyer, the normal residency rules apply. A nonresident heir or estate files the GIT/REP-1 unless another exemption fits.
