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Wendy Reed
Wendy Reed, Enrolled Agent
Category: Tax
Satisfied Customers: 3346
Experience:  15+ years tax preparation and tax advice.
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what is capital gains tax rate for new jersey

Resolved Question:

selling a rental house in new jersey. owners live in connecticut. what will the captial gains tax rate be?
Submitted: 10 years ago.
Category: Tax
Expert:  Wendy Reed replied 10 years ago.
There is no separate capital gain tax rates in New Jersey. Capital gains are taxed as ordinary NJ income. You will file a non-resident New Jersey tax return and report your capital gain (and any other New Jersey source income including rents). Your tax will be based on your the ratio of New Jersey source income to your total gross income. New Jersey income tax rates range from 1.4-8.97%.
Customer: replied 10 years ago.
Reply to Wendy Rieger's Post: Hi Wendy;

I like your answer BUT I was under the impression that a rental could be taxed anywhere between 15 and 30% as a capital gain. By the way, a lawyer led me to believe that but maybe I way misunderstood! What do you think?   Thanks!
Expert:  Wendy Reed replied 10 years ago.

I believe that he may be referring to federal tax, or a combination of federal and state tax. If you have owned your rental for more than one year, your maximum federal capital gain tax would be 15%. However, any part of the gain that is considered recapture of depreciation would be taxed at a maximum of 25%. So, if you consider that part of the gain will be taxed at 15% federal, part at 25% federal, and additional state tax, this could be between 15-30%. The attorney was probably giving you ballpark figures.


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