Selling your Barrington home is exciting, but taxes and closing costs can take a bigger bite than you expect. You want a clean sale and the highest possible net in your pocket. With the right timing, documentation, and smart planning, you can keep more of your proceeds. This guide walks you through the key federal and New Jersey rules and the practical steps to help you maximize what you take home. Let’s dive in.
Know your tax drivers
Federal home-sale exclusion
If your Barrington home has been your primary residence, you may qualify for the Section 121 exclusion. You can exclude up to $250,000 of gain if you file single, or up to $500,000 if married filing jointly, when you meet the 2‑of‑5‑years ownership and use tests. You can generally use this exclusion once every two years. Review the basics in IRS Publication 523’s home-seller tips.
If part of your gain is taxable, long‑term capital gains rates apply when you owned the home more than one year. Most sellers fall into the 0%, 15%, or 20% brackets depending on income. See the current capital gains rate overview for context.
High earners may also face the 3.8% Net Investment Income Tax on the taxable portion of the gain. The NIIT can apply when modified AGI exceeds certain thresholds, but any gain you exclude under Section 121 is not subject to NIIT. Review the thresholds on the IRS NIIT page.
If you receive a Form 1099‑S or cannot exclude the full gain, you must report the sale on your return. Learn about reporting and special rules like depreciation recapture in IRS Publication 544.
New Jersey taxes and fees
New Jersey taxes capital gains as regular income, so any taxable portion of your gain after the federal exclusion flows into your NJ return. Get an overview of how the state treats gains in this New Jersey capital gains summary.
Plan for the state’s Realty Transfer Fee at closing. The seller is responsible for this graduated fee, which is calculated per $500 of consideration. For high‑value sales, an added graduated percent fee can apply. See rates on the NJ Realty Transfer Fee page.
If you are a nonresident at the time of sale, New Jersey requires an estimated Gross Income Tax prepayment at closing. The minimum is 2% of the sale price, unless you qualify for a listed assurance or exception. Review the rules and forms on the NJ GIT/REP FAQs.
Estimate closing costs in Camden County
Your net proceeds equal your sale price minus your mortgage payoff, closing costs, commissions, NJ taxes and fees, and any income taxes due on the gain.
Typical seller line items include:
- Real estate commissions. Recent industry changes mean buyer and broker compensation is now more openly negotiated, which can shift who pays for what. Outcomes vary, but negotiation can lower your cost. See coverage of these changes in Axios.
- NJ Realty Transfer Fee. Use the Division of Taxation’s tables to calculate it for your price point.
- Title, recording, settlement fees, seller’s attorney, and owner’s title policy.
- Prorated property taxes and any HOA payoff.
- Buyer concessions, if negotiated.
Across New Jersey, sellers’ total closing costs often range from a few percent up to around 8–10% when commissions are included. For a grounded estimate, review this NJ closing cost overview and ask your closing team for a customized net sheet.
Strategies to maximize after‑tax proceeds
Time your sale to qualify
If you are close to meeting the 2‑of‑5‑years ownership and use tests, waiting a few months can preserve the full $250,000 or $500,000 exclusion. Keep proof of occupancy such as utility bills and license records. See key rules in IRS Publication 523’s guidance.
Maximize your adjusted basis
A higher basis reduces taxable gain. Add qualifying capital improvements to your basis, such as additions, a new roof, major HVAC, or built‑in systems. Keep receipts and dates. Routine repairs do not increase basis. Review basis basics in Publication 523’s tips.
Tip: If you plan pre‑listing improvements to lift your sale price, programs like Compass Concierge can help you complete updates without upfront cost. Improvements that qualify as capital projects may increase basis while also improving market appeal.
Plan for rental or business use
If you rented the home or used part of it for business, depreciation taken reduces basis and the depreciation portion of your gain is subject to special recapture rules. Unrecaptured Section 1250 gain can be taxed up to 25% on that portion. Learn how this works in IRS Publication 544.
Consider installment sale timing
In some cases, structuring an installment sale spreads gain across years, which may keep you in a lower bracket and improve cash flow. This option carries complexity and risk, so coordinate with your tax advisor. See an overview of strategies, including installment sales, in this Business Insider explainer.
Investment property? Explore 1031
If the property is not your primary residence, a 1031 exchange can defer taxes by reinvesting in like‑kind investment real estate within strict timelines. A 1031 is not available for a primary residence. Read a quick primer in this 1031 overview.
Look for NJ RTF relief
New Jersey offers limited Realty Transfer Fee exemptions or reductions in certain cases, including some senior or disabled seller situations. Confirm your eligibility and the correct forms on the NJ RTF resource page.
Negotiate commissions and allocations
Small changes in commission structure can raise your net. Post‑2024 rule changes encourage more open negotiation of who pays buyer‑broker compensation. Results vary by transaction, so have your listing agent model scenarios. Review the context in Axios’s coverage.
Nonresident? Prepare GIT/REP early
If you have moved out of New Jersey, plan your GIT/REP forms well before closing. In some cases, specific assurances can reduce or avoid the 2% prepayment, but paperwork must be exact. Start here: NJ GIT/REP FAQs.
Build your Barrington net sheet
Create a working net sheet with your agent and closing attorney:
- Start with a realistic sale price based on current Barrington comps.
- Subtract your mortgage payoff and any liens.
- Estimate the NJ Realty Transfer Fee using the state tables.
- Add title, recording, attorney, and settlement fees.
- Add commissions based on your listing agreement.
- Model buyer concessions and prorated taxes.
- Estimate any income taxes due on taxable gain after the federal exclusion.
This simple exercise helps you time your list date, set pricing, and pick projects that improve your bottom line.
What to bring to your CPA and closing team
Stay organized to avoid delays and overpaying tax.
- Prior closing statement from your purchase (HUD‑1 or settlement statement).
- Receipts and dates for capital improvements.
- Records for any rental periods, including leases and depreciation schedules.
- Preliminary closing disclosure for your pending sale.
- Mortgage payoff statement and any lien information.
- Identification and documents showing primary residence status.
- Notes on any prior use of the Section 121 exclusion. See Publication 523’s tips.
- For nonresidents or non‑U.S. sellers, gather the GIT/REP forms and ID numbers; review the NJ GIT/REP FAQs.
Ready to map out your numbers and next steps? A clear plan and smart negotiation can add thousands to your net.
Looking for a hands‑on partner to build a custom seller net sheet, advise on pre‑listing updates, and keep your sale on track? Connect with Shamar Brossard for a personalized strategy to maximize your proceeds.
FAQs
Will I owe tax when I sell my Barrington home?
- If you meet the 2‑of‑5‑years tests for the federal home‑sale exclusion, you can exclude up to $250,000 of gain if single or $500,000 if married filing jointly; any gain above that may be taxable. See IRS Publication 523’s tips.
How does New Jersey tax my home sale gain?
- New Jersey treats capital gains as regular income, so any taxable portion after the federal exclusion is taxed at state rates. See this New Jersey capital gains overview.
What is the NJ Realty Transfer Fee and who pays it?
- The seller pays the state Realty Transfer Fee, a graduated charge based on the sale price; higher‑value sales may owe an added graduated percent fee. Check the NJ RTF page for current schedules.
I moved out of NJ. Will money be withheld at closing?
- Nonresident sellers generally must make an estimated tax prepayment at closing, with a minimum of 2% of the sale price unless a listed assurance applies. Review the NJ GIT/REP FAQs.
Do improvements lower my taxes when I sell?
- Qualifying capital improvements increase your adjusted basis, which can reduce taxable gain. Keep receipts and dates. See basis guidance in Publication 523’s tips.
Can I use a 1031 exchange for my primary home?
- No. A 1031 exchange is for investment or business real estate, not a primary residence. See a quick 1031 overview to understand when it can apply.
