New Jersey Capital Gains Tax

Selling or transfer of any capital asset in the state of New Jersey comes under the law of New Jersey capital gains tax. The short-term capital gains are taxed at ordinary income tax rate while the tax rate for the long-term capital gains varies in New Jersey.

The New Jersey capital gains tax is implemented on the selling and transfer of assets like land, both private and commercial real estate property, mutual funds, stocks, bonds and currencies. The seller may evade the tax by adopting some strategies provided by the Internal Revenue System of the USA.

The payment for the capital gains tax in New Jersey should be made in the form of check or money order payable to the State of New Jersey – Division of Taxation. Cash payment for the tax is not acceptable by the division.The tax amount to be paid is determined by multiplying the gain earned from the property sale by the highest Gross Income Tax rate, which is 8.97% in the state. The gain is determined not considering any distributions made to the beneficiaries by estates or trusts during the taxable year.

The payment should not be less than 2% of the consideration received over the gain in New Jersey.

The capital assets may be either short-term assets or long-term assets in New Jersey. The short-term assets are those capital assets, which are held for less than one year while the long-term assets are held for more than one year. The short-term assets are taxed at a rate of ordinary income, which is generally higher than the rate of long-term capital gains taxes. The rate of long-term capital gains taxes, on the other hand, may be different for different income tax brackets. As regulated by the federal government, the tax rate on the long term capital gains is 15% since 2003 while those who fall in the last two income brackets have to pay 5% tax. The rate of tax on the long-term capital gains in New Jersey is likely to increase in 2011 to 20%.

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