New Jersey's "exit tax" is the nickname for an estimated Gross Income Tax payment collected at closing when a nonresident, or a resident who is moving out of state, sells New Jersey real estate. It exists so the state collects tax on the gain before the seller leaves. It's a deposit, not a penalty, and it's credited on your New Jersey return.
How much is withheld
The estimated payment is the greater of:
- 2% of the total sale price, or
- the taxable gain multiplied by New Jersey's highest income-tax rate for the year (currently 10.75%).
Because it's based on the higher figure, sellers with little or no gain still see 2% of the price withheld unless they qualify for an exemption.
The forms
- GIT/REP-1: the nonresident seller's declaration; the estimated payment is made with it at closing.
- GIT/REP-2: used when the seller prepays directly with the Division of Taxation before closing and brings the receipt.
- GIT/REP-3: the seller's residency certification or exemption. Residents certify here, and nonresidents claim exemptions, most commonly that the entire gain is excluded under the federal primary-residence rule (Section 121), or that the transaction is a 1031 exchange, gift or transfer between spouses.
- GIT/REP-4: a waiver request for unusual situations.
How to legally reduce or avoid it
- Sell while you're still a New Jersey resident. Residents certify on GIT/REP-3 and no withholding is taken; the gain is simply reported on the normal NJ-1040. Many families close on the New Jersey home before changing domicile for exactly this reason.
- Claim the primary-residence exclusion. If your entire gain is excludable under federal Section 121 (up to $500,000 for a married couple who've lived there two of the last five years), you can certify the exemption on GIT/REP-3 and avoid withholding.
- Elect the gain method if your gain is small. If 10.75% of your gain is less than 2% of the price, the gain method may still be the better calculation; your closing attorney handles the election.
- File and get the refund. If you overpaid, the excess comes back when you file your NJ-1040NR (or part-year NJ-1040) for the year of sale.
What's waiting on the other side
Florida has no state income tax and no withholding on your future Florida sale, no estate tax and no inheritance tax (New Jersey still taxes inheritances to non-lineal heirs). See the New Jersey to Boca Raton guide for where Bergen, Essex, Morris and Shore families settle.
Why Boca Raton, specifically
South Florida has a dozen luxury markets. Relocating families keep choosing Boca Raton because it combines things the others split up: a real downtown (Mizner Park, Royal Palm Place, the Boca Raton Museum of Art and The Boca Raton resort), five miles of mostly uncrowded beach, a dense cluster of private golf and yacht clubs, strong public and private schools, two international airports within about 30 minutes, a Brightline station for Miami and Orlando, and an executive airport for private aviation right in the city.
East Boca Raton, east of I-95 and especially east of Federal Highway, is where most relocating buyers at the top of the market settle: the deep-water estates of Royal Palm Yacht & Country Club, the Intracoastal homes of Lake Rogers Isle, the walkable Golden Triangle, the private-club life at St Andrews Country Club, and the oceanfront and Intracoastal condominiums along A1A and downtown.
This page is general information for people considering a move to Boca Raton. It is not tax, legal or financial advice. Rates, exemptions and deadlines change; verify current figures with a CPA or attorney licensed in the states involved.
