Hi and welcome to Just Answer!

You will report the sale transaction on the schedule D - part I or II depending if you owned the property more or less than a year. The long term capital gain (if the property owned more than a year) is taxed at reduced rate - not more than 15%. The part of the long term capital gain that otherwise would be taxed at 15% or less - will have zero percent rate in 2011.

Because the property is in NJ – the gain is taxable for that state – you will file NJ tax return as a nonresident – and will be taxed only on income from NJ sources. Tax rates depending on your total income are between 1.4% and 8.97% – see for reference - http://www.state.nj.us/treasury/taxation/pdf/other_forms/tgi-ee/njtaxratesch10.pdf

As you are PA resident – all your income will be taxable regardless of the source. Because the same income will be taxed fro NJ and for PA – you will claim a credit for taxed paid to NJ on your PA tax return.

Let me know if you need any help or clarification.

Yes - in general your understanding is correct. You will have actual amounts after you file all these tax returns.