Question

New Jersey Capital Gains tax on Real estate

Forum|Forum|1 year ago
March 17, 2025
1 reply
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I do not qualify for any exclusion on the sale of my house in New Jersey. Can I use investment (stock) losses to reduce the capital gain on the real estate sale on my New Jersey Tax return? I am reading that you cannot apply a net loss in one category of income against income or gains in a different category on your NJ-1040.

I am reading that you can on the Federal return. Please confirm

Not A Product Question

M

MAK70

If you are a New Jersey resident, you would use the federal amount. Unfortunately, if you are a nonresident, your New Jersey source income would be the gain on the sale, you would not be able to offset the gain with the losses.

R

RonDA64Author

Mary,

Thanks for the reply, but I don't believe what you wrote is correct.

I did 2 hypothetical runs in turbotax today to see the impact of the sale of a 2nd home in NJ. Turbotax filled in the NJ non-resident tax form. I put in a 1099S form for the sale of the house claiming $150K in capital gains on the sale of the house. The $150k showed up as taxable income on the NJ 1040NR. I then did one run with $0 Capital losses and another run with $150K of capital losses. The run with the $150k of capital losses reduced my NJ taxable income by $150K.

R

RonDA64Author

Mary,

This is trickier than I thought. So my taxable income went down, but the full Cap gain on the house was considered gain from NJ source. This is perhaps what you were trying to tell me.

As a nonresident, you must calculate your tax on income from all sources as if you were a resident, and then prorate your tax based on your New Jersey source income.

So the run with the capital loss resulted in less tax, but not by the full amount would be of eliminating the gain on the house. This is a very tricky tax calculation.