Florida residency

Forum|Forum|2 years ago
December 26, 2023
2 replies
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I'm considering changing my residency from NJ to FL. I spend 7 months per year in FL and most of the remaining months in NJ. Do I have to pay part-year NJ income taxes if I become a FL resident after Jan. 1? I understand that I will lose the 1-time $500K capital gain exclusion if I decide to sell my NJ home in the future. I know there's a formula to retain that exclusion. I've been in my NJ home for almost 50 years and don't have receipts, etc. to document all the improvements/repairs that were done.

I understand that I need to get a FL license and insure at least 1 of of my cars in FL. Besides saving the NJ income tax and possible losing the $500K capital gain exclusion, what other financial considerations s are there? Thank you for your help.

Not A Product Question

Best answer by Anonymous_

If I become a Florida resident on Jan. 1, 2024, do I have to sell and close on my NJ home by Jan. 1, 2027 to be eligible for the $500K capital gain exclusion? That would be 3 years (2024, 2025 and 2026).

Thanks again.

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Anonymous_

Employee

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TomD8

Employee

After you establish your domicile (your main, primary home) in Florida, you can only be taxed by New Jersey on New Jersey "sourced" income. You establish your domicile in Florida on the date you begin living there with the intention (as evidenced by your actions) of making FL your new permanent, primary home.

One example of income "sourced" in New Jersey would be income earned from work actually performed in New Jersey.

Also, a capital gain from the sale of property located in New Jersey is taxable by New Jersey, regardless of your residency at the time of the sale. Your capital gain from the sale of a home in NJ is calculated the same way as it is for federal tax purposes. In other words, NJ will tax only the amount of your capital gain that is taxable on your federal tax return.

If you do move your domicile.to Florida, then you will have to file a part-year resident NJ tax return for the year of the move. All your income up until the date you establish your domicile in Florida would be taxable by NJ.

This NJ tax publication details NJ's rules on these situations:

https://www.nj.gov/treasury/taxation/pdf/pubs/tgi-ee/git6.pdf

Note that if you spend 183 days or more of a tax year in NJ after your move to FL, then NJ will consider you to be a "statutory" NJ resident, which would make ALL your income for that year taxable by NJ.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

mitchden1Author

Employee

What is the rule for the capital gain exclusion of $500K (2 people) if I sell my principal residence in NJ in the future - after I become a Florida resident? I'm considering becoming a Florida resident because I spend 7 months in Florida and I wouldn't have to pay any NJ income tax. I've been in my NJ home for almost 50 years and I don't have receipts of all the improvements that I've made.

Thanks for your help.