NJ Exit Tax and Mansion Tax in 2026: What Home Sellers Actually Pay

The NJ “exit tax” is an estimated income-tax payment for certain nonresident sellers of New Jersey real estate. It is not a separate charge simply for moving out of the state. The payment can be required at closing unless an exemption or waiver applies.

Three different charges can appear in the same sale:

The two transfer fees are not income-tax prepayments. Their exemptions differ from the GIT/REP rules. Sources: NJ Technical Bulletin TB-57(R), revised June 15, 2026, and NJ Realty Transfer Fee guidance.

In short (2026 sales; checked October 6, 2026). The NJ “exit tax” is an estimated Gross Income Tax payment certain nonresident sellers make before or at closing. It is not a separate tax for leaving New Jersey.

• Rate: the greater of 10.75% of reportable federal gain or 2% of the seller’s share of the deed consideration.
• How it is collected: When a payment is due at closing, the seller gives Form GIT/REP-1 and payment to the settlement agent.
• No gain or a loss: The 2% minimum can apply even with no gain. A seller with a capital loss can seek a GIT/REP-4 waiver before recording.
• Since 2004: GIT/REP forms have been required since August 1, 2004. The Division uses them to decide whether a nonresident seller must prepay estimated Gross Income Tax.
• Who is exempt at closing: Form GIT/REP-3 lists the assurances. They include qualifying NJ residents (box 1), qualifying principal residences (box 2), and qualifying Section 1031 exchanges (box 7a). An assurance exempts the closing payment, not all income tax.
• A credit, not a final tax: The payment counts against the income tax due on the NJ-1040NR for the year of sale. Only an overpayment is refundable.
• Mansion tax is separate: For covered, nonexempt 2026 sales above $1 million, the seller is legally responsible for the Graduated Percent Fee. It runs from 1% to 3.5% of the entire consideration.

The “NJ exit tax” is really a prepayment

When a nonresident individual, estate, or trust sells New Jersey real estate, an estimated income-tax payment is generally required before or at closing unless a seller’s assurance on GIT/REP-3 or an approved waiver applies. It is credited against income tax, rather than added as a separate tax for leaving New Jersey.

When the general payment requirement applies, the seller pays the greater of:

• The reportable federal gain × 10.75% (New Jersey’s top Gross Income Tax rate), or
• 2% of the seller’s share of the consideration stated in the deed.

The 2% minimum can apply even with no gain, but an applicable exemption or approved waiver changes the payment requirement. For co-owners, use the appropriate seller’s share rather than charging each seller 2% of the entire property’s consideration. See the NJ GIT/REP calculation guidance.

For a required payment at closing, the seller gives Form GIT/REP-1, the Nonresident Seller’s Tax Declaration, and payment to the settlement agent. An exempt seller generally provides GIT/REP-3 instead. The recording requirement is the appropriate form and any payment due, not GIT/REP-1 and a payment in every case. A seller seeking relief for a capital loss should follow the Division’s GIT/REP-4 waiver process before recording. TB-57(R), pages 1 and 4–5.

Who is exempt at closing

Form GIT/REP-3, the Seller’s Residency Certification/Exemption, provides several seller’s assurances. Box 1 covers a qualifying New Jersey resident seller. Box 2 covers a qualifying principal residence and can apply to residents or nonresidents. These are exemptions from the estimated payment at closing, not a blanket exemption from income tax or transfer fees.

One common exemption is the principal residence. Under federal law (IRC Section 121), you can exclude gain when you sell your main home. The cap is $250,000 if you are single, or $500,000 if you are married filing jointly.

The federal exclusion generally requires ownership and use for at least 2 of the last 5 years, subject to exceptions. For the joint-return exclusion, either spouse must meet the ownership test and both must meet the use test. Other eligibility limits apply, including the general restriction on using the exclusion again within two years. IRS Topic 701.

Do not assume a property is ineligible solely because it has some rental history. A qualifying former or partly rented home may receive a limited exclusion; nonqualified use, separate rental space, and depreciation can affect the taxable amount. A property held only for investment does not qualify as a main home. IRS Publication 523.

Current NJ guidance allows a qualifying seller to use box 2 even when gain exceeds the home-sale exclusion. Tax on the nonexcluded gain still remains due, and a payment using NJ-1040-ES after recording may be appropriate. See the current GIT/REP-3 instructions and TB-57(R), page 3.

How to get the exit-tax money back

The estimated payment is a credit, not a final tax. A nonresident seller files a New Jersey nonresident return (NJ-1040NR) for the year of the sale, reports the actual gain, and applies the prepayment against the income tax due.

Only an overpayment is refundable. For a current-year sale, Form A-3128 provides a way to request a refund after the deed is recorded without waiting to file the annual return. The Division must have received the estimated payment before processing the claim. Submit the required settlement statement or closing disclosure and the applicable gain or exemption information. An A-3128 claim does not replace the required NJ-1040NR. Form A-3128 and instructions.

For a prior-year overpayment, the Division directs nonresidents to file an amended NJ-1040NR, or an original NJ-1040NR if one was never filed, within the applicable refund time limit. Use the appropriate resident return or refund procedure if a resident’s payment was made in error. TB-57(R), page 7.

The mansion tax changed in 2025 — and the seller now pays

For years, the “mansion tax” was a flat 1% paid by the buyer on home sales over $1 million. That changed.

For deeds submitted for recording on or after July 10, 2025, the Graduated Percent Fee is legally imposed on the seller, subject to applicable exemptions and the transition rules for certain 2025 transactions. For covered, nonexempt sales in 2026, each rate applies to the entire consideration, not just the amount above the threshold. NJ implementation notice.

• 1% of the full price — over $1,000,000 up to $2,000,000
• 2% of the full price — over $2,000,000 up to $2,500,000
• 2.5% of the full price — over $2,500,000 up to $3,000,000
• 3% of the full price — over $3,000,000 up to $3,500,000
• 3.5% of the full price — over $3,500,000

For a covered, nonexempt transfer, a $2,000,000 sale produces a $20,000 Graduated Percent Fee. A $2,000,001 sale produces a $40,000.02 fee. These illustrative amounts exclude the separate RTF and other closing costs.

Near a threshold line, the contract price itself becomes a planning point.

The fee applies to deeds for:

• Class 2 residential property
• Class 3A farmland containing a building or structure intended or suited for residential use
• Class 4A commercial property (other than industrial or apartment)
• Class 4C cooperative units

Exemptions must be checked separately; a GIT/REP income-tax assurance does not automatically remove this fee. See NJ’s covered classifications, rates, and RTF-1EE exemption form.

If you are selling a high-value home in a town like Short Hills, Alpine, or Saddle River, this is now a real seller cost. Plan for it before you sign.

The Realty Transfer Fee (almost every seller pays this)

Separate from the mansion tax, New Jersey charges a Realty Transfer Fee (RTF) on nearly every sale. The seller pays it at closing.

The standard RTF uses a rate schedule based on total consideration. For a sale not over $350,000, the first $150,000 is charged at $2.00 per $500. For a sale over $350,000, the first $150,000 is charged at $2.90 per $500, and subsequent portions use that higher schedule’s rates. Select the correct schedule before calculating the fee; it is separate from the Graduated Percent Fee above. NJ RTF rate schedules.

Qualifying senior citizens aged 62 or older, blind persons, and disabled persons may receive a partial RTF exemption. Qualifying low- and moderate-income housing also has a reduced schedule. Eligibility and the required affidavit matter. NJ RTF partial-exemption guidance.

The RTF is easy to overlook until the closing statement arrives. On a typical Bergen County home, it is a real line item worth budgeting for.

Selling investment property? Consider a 1031 exchange

Selling a rental or investment property instead of your main home? You may be able to defer the federal gain through a Section 1031 like-kind exchange. You reinvest the proceeds into other business or investment real estate and postpone the tax (IRS, like-kind exchanges).

Two cautions apply. First, since 2018, Section 1031 covers only real property, not personal property. Second, the IRS timelines are strict — you have a limited window to identify and close on the replacement property. A qualifying exchange can change the New Jersey closing-payment requirement through GIT/REP-3, as explained below. Our real estate investor accounting services include reviewing the tax treatment alongside the closing professionals.

Moving to Florida, 1031 exchanges, and the GIT/REP-3 exemptions

Two situations raise the most exit-tax questions. The retiree who moves to Florida before closing, and the investor rolling a rental into a 1031 exchange. Here is how the GIT/REP rules treat each one.

Moving to Florida before you close

Say you establish your home in Florida in spring and close on the New Jersey house in August. That move can make you a nonresident seller, but the appropriate GIT/REP form still depends on your circumstances and any seller’s assurance that applies.

A qualifying principal residence can use box 2 of GIT/REP-3 even when the seller is a nonresident. This does not eliminate income tax on any gain that remains taxable. For mixed residential and rental use, review the allocation and the form requirements with the closing professionals rather than assuming the entire property qualifies.

Use the Division’s current residency and form guidance. Its June 2026 bulletin explains that box 1 is based on residency at closing, while box 2 addresses principal-residence eligibility. TB-57(R), page 3. Our NJ tax planning services can help sellers review these facts before closing.

What a 1031 exchange changes — and what it does not

On the federal side, a Section 1031 exchange defers your gain — it does not erase it. A few ground rules apply:

• Since 2018, Section 1031 covers real property only, not personal or intangible property
• Cash or other non-like-kind property — called boot — can trigger recognized gain; the amount depends on the exchange calculation in the Form 8824 instructions
• You report the exchange to the IRS on Form 8824, Like-Kind Exchanges
• U.S. real property is not like-kind to property outside the U.S.

New Jersey’s GIT/REP-3 box 7a identifies qualifying federal nonrecognition transactions, including Section 1031. Box 7b applies only when the seller received solely like-kind property. Check only the assurances that apply. For a partially exempt exchange, the current instructions offer two routes for the nonexempt portion: a GIT/REP-1 and estimated payment at recording, or an estimated payment to the State after recording. A failed exchange creates additional payment and reporting obligations. Review the exchange documents, the value of like-kind property, and any non-like-kind property with the settlement agent and tax adviser. GIT/REP-3 and instructions.

An exchange also touches your passive-loss history and real estate professional status. Our guide to real estate professional status for NJ rentals covers that side of the sale.

Weighing a Florida move or an exchange against a straight sale? That is a numbers question. Every closing is different, so book a pre-closing review before you sign.

Three mistakes NJ sellers make

• Treating the exit tax as money lost. It is a credit. Reconcile the payment on the appropriate New Jersey return and claim any overpayment through the applicable refund procedure.
• Confusing transfer fees with income-tax prepayments. A GIT/REP assurance does not automatically remove the separate transfer fees; check their exemptions too.
• Missing an applicable GIT/REP-3 assurance. Check eligibility and complete the correct form; an exemption from the closing payment does not remove any final income-tax liability.

How ProAxis helps New Jersey sellers

Selling New Jersey property has three moving parts: the estimated income-tax prepayment, the mansion tax, and the Realty Transfer Fee. Each is easy to get wrong. Owners in this situation often benefit from a short pre-closing review.

ProAxis is a licensed New Jersey CPA firm. We help sellers:

• Confirm the right GIT/REP form and avoid over-withholding at closing
• Apply the IRC Section 121 exclusion correctly on a principal residence
• Project the new graduated mansion tax on a high-value sale
• Coordinate a 1031 exchange on investment property
• Reconcile the prepayment on the NJ return and recover any refund

If you are planning a sale, explore our real estate tax planning services or schedule a free consultation. For an entity-owned rental, review whether an NJ BAIT election fits the entity and its owners. If a move out of state is part of a larger wealth-transfer plan, our estate and gift tax services can help you plan ahead. Comparing providers for investment property? See the best real estate CPA firms in NJ.

Frequently Asked Questions

Is the NJ exit tax a real tax?

There is no separate tax simply for leaving New Jersey. The term usually refers to an estimated Gross Income Tax payment required from certain nonresident property sellers. The payment requirement is real unless an exemption or waiver applies. It is credited against the seller’s income tax; only an overpayment is refundable.

How much is the NJ exit tax when I sell my house?

If a nonresident seller must make the estimated payment, the general rule is the greater of reportable federal gain multiplied by 10.75% or 2% of the seller’s share of the consideration stated in the deed. The 2% minimum can apply even without a gain, unless a GIT/REP-3 assurance or approved waiver applies. It is not the final income-tax calculation.

Who pays the NJ mansion tax in 2026?

For covered, nonexempt transfers in 2026, the seller is legally responsible for the Graduated Percent Fee, commonly called the mansion tax. It applies above $1 million and ranges from 1% to 3.5% of the entire consideration, depending on the amount. It is separate from the standard Realty Transfer Fee and the GIT/REP income-tax payment.

Is selling my primary residence in NJ exempt from the exit tax?

A qualifying seller can use Form GIT/REP-3 to claim an exemption from the closing payment. Resident sellers may qualify under box 1; residents and nonresidents meeting the principal-residence requirements may use box 2. Under current NJ guidance, taxable gain above the home-sale exclusion can still be due on the tax return, even when box 2 applies. An exemption from payment at closing does not exempt all gain from income tax.

How do I get the NJ exit tax money back?

A nonresident seller can claim excess estimated payment on Form NJ-1040NR for the year of the sale. For a current-year sale, Form A-3128 can request an earlier refund after the deed is recorded; processing requires the Division to have received the payment and supporting documents. It does not replace the required NJ-1040NR. For a prior-year overpayment, use an original or amended NJ-1040NR, as applicable, within the refund time limit. Only the overpayment is refundable.

Does the NJ mansion tax apply to commercial property?

Yes, covered property includes Class 4A commercial property, other than industrial or apartment property. The Graduated Percent Fee applies above $1 million unless an exemption applies. Other covered classes include Class 2 residential property, Class 3A farmland containing a residential building or structure, and Class 4C cooperative units.

Do I pay the NJ exit tax if I move to Florida before selling my NJ home?

A move before closing can make you a nonresident seller, but it does not automatically require a closing payment. A seller who qualifies for the principal-residence assurance in box 2 of GIT/REP-3 may use it as a nonresident. Confirm residency, property use, and Section 121 eligibility; any taxable gain still must be reported and paid under the applicable return and estimated-tax rules.

Does a 1031 exchange avoid the NJ exit tax at closing?

GIT/REP-3 box 7a identifies qualifying federal nonrecognition transactions, including Section 1031. Box 7b applies only when the seller received solely like-kind property. Check only the assurances that apply. For a partially exempt exchange, current NJ guidance allows payment on the nonexempt amount through GIT/REP-1 at recording or an estimated payment to the State after recording. A failed exchange can create additional payment and reporting obligations.

This article is general information for New Jersey property sellers. It is not tax advice and does not create a CPA-client relationship. Tax rules change and apply differently to each situation. Figures are current as of the date above and are sourced to the IRS, the New Jersey statutes, and the N.J. Division of Taxation. Confirm your specifics with a licensed CPA before you act.