What happens to NJ taxes if we buy a house elsewhere?
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Q. My wife and I currently own a home in New Jersey. If we are buying a vacation home in South Carolina with the intention of making it our legal home, can we just change the designation of our New Jersey home from primary residence to vacation home with respect to the mortgage company , homeowners insurance company and Motor Vehicle Commission are involved and if so, how to proceed? Also, is there a different formula for calculating property taxes on a vacation home than on a primary residence in New Jersey?
– Make plans
A. It sounds like you’re getting ready to take a big step.
There are several things you need to do.
To no longer be considered a New Jersey resident for tax purposes, you must either sever your New Jersey domicile and spend no more than 183 days in the state, said Neil Becourtney, certified public accountant and partner. tax from CohnReznick to Holmdel.
He said there’s a second, less common test where you don’t separate your home but keep a home in another state and you don’t spend more than 30 days in New Jersey. In that case, you can still be considered a non-resident, he said.
Changing your domicile is not as simple as notifying your mortgage company, insurance company and the Motor Vehicle Commission of your change.
Becourtney said a domicile is the place you consider your permanent residence. Many different factors are looked at, including: where you vote; where your vehicles are registered; the location of your doctors, country clubs and religious institutions; and your proximity to children you have and business activities – your workplace or a place of business you own or manage.
If you want to change your home to South Carolina, all your mail should be addressed to the South Carolina address, even New Jersey utilities, he said.
He said home is somewhat subjective and one size doesn’t fit all.
“Assuming you successfully change your domicile, as long as you are not in New Jersey for more than 183 days – the ‘legal resident’ test – you will be treated as a non-resident of New Jersey,” a- he declared. “As a nonresident, you would only be subject to tax on New Jersey source income. Any New Jersey non-resident tax incurred would result in a credit against your South Carolina resident tax.
Becourtney said your New Jersey property taxes aren’t affected by whether your home is a primary residence or a vacation home.
“Property taxes in New Jersey are eligible for a reduction for certain taxpayers, including veterans, seniors, and those who are blind or disabled, often with income restrictions,” he said.
However, many of these programs are only for New Jersey residents. For example, you will not be eligible for the Senior Freeze for a vacation home or second home or property that you rent to someone else.
Send your questions to [email protected].
Karin Price Mueller writes the Bamboos column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Register for NJMoneyHelp.comit is weekly e-newsletter.