I am selling my vacation home that is located in Ocean City, NJ. I live in PA. What are the Taxes that I will have to pay? (Federal, State, City)
State/Country relating to question: New Jersey
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.
I am just looking for the Taxes due to the sale. If I understand correctly, I will pay 15% federal on the sale price of the house minus the Basis. I will also pay between 1.4% and 8.97% on the sale price of the house minus the basis. I also have to pay PA tax (2.8%) on the sale of the house minus the basis and minus what I pay NJ in taxes. Do I have it correct?
Yes - in general your understanding is correct. You will have actual amounts after you file all these tax returns.
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