As the founder and broker of Tverdov Housing, with over a decade specializing in New Brunswick's real estate—particularly multi-family and investment properties near Rutgers University—I've helped many sellers understand and apply the principal residence capital gains exclusion. This federal benefit (IRC Section 121) is fully recognized by New Jersey, meaning eligible sellers in New Brunswick can exclude gains from both federal and state taxes—no separate NJ rules apply beyond mirroring federal eligibility.
Eligibility is straightforward and the same nationwide, including New Brunswick: You qualify if, during the 5-year period ending on the sale date:
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You owned the home for at least 2 years (ownership test—not necessarily consecutive).
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You used it as your principal residence for at least 2 years (use test—again, not consecutive; determined by factors like voting registration, driver's license, and primary living location).
If met:
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Single filers: Exclude up to $250,000 of gain.
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Married filing jointly: Exclude up to $500,000 (both spouses must meet the use test; only one needs to meet ownership for joint returns).
Partial exclusions apply for shorter periods due to job changes, health issues, or unforeseen circumstances (prorated based on time met). You cannot claim if you've used the exclusion on another home sale in the prior 2 years.
For NJ specifics: Residents report on their NJ-1040 but exclude the same amount as federally. At closing, file GIT/REP-3 to certify residency or claim the Section 121 exemption, avoiding estimated payments. Nonresidents can also claim it via GIT/REP-3.
Most primary homeowners in New Brunswick qualify fully, especially long-term residents near campus or downtown. Investment or rental properties typically don't—unless converted back to primary use meeting the tests.
At Tverdov Housing, we review your timeline during listing consultations to confirm eligibility and connect with tax pros for personalized advice.
For more on Central Jersey tax strategies, check The New Jersey Real Estate Investor podcast.
Planning a sale? Contact Tverdov Housing—we'll help maximize your exclusion and net proceeds in New Brunswick's market.
