[beachfran]

We recently sold a rental property in NJ (2009). We are not Jersey residents. I would like to know the capital gains tax rate -- our accountant calculated ours to be over 78%. I also read someplace that the rate is calculated differently for over age 70 which we are. All of the info I read on capital gains in Jersey had a limit of about 8%. Can you clarify this for me. Thank you.

Fran Sweeney

[ebaines]

NJ taxes capital gains the same as ordinary income, which depending on your tax bracket could be as high as 8.97%. I wonder if what your accountant means is that you've been taking depreciation for many years, and consequently the tax cost basis is now quite low - perhaps near $0. So now paying 8.97% on the difference between the selling price and your tax cost basis is equivalent to paying 78% of the actual gain (meaning the differece between selling price and what you originally paid for the property) - is that what he means? Remember: when you depreciate a property you are merely delaying taxes, and eventually you have to pay up - typically in capital gains when you sell the property (unlesss you roll the proceeds into another property).