New Jersey § 54a:6-9

§ 54a:6-9.

a. The gain realized from the sale or exchange of property by a taxpayer shall be

excludable from the gross income of the taxpayer at the election of the taxpayer,

which shall be in conformity with the election of the taxpayer made for federal income

tax purposes pursuant to section 121 of the federal Internal Revenue Code of 1986 , 26 U.S.C. s.121 , if, during the five-year period ending on the date of the sale or exchange, that

property has been owned and used by the taxpayer as the taxpayer's principal residence

for periods aggregating two years or more. b. The amount of gain excludable from gross income under subsection a. of this section

with respect to any sale or exchange shall not exceed: (1) $250,000; or (2) $500,000, in the case of a husband and wife filing jointly for the taxable year

of the sale or exchange of the property, if: (i) either spouse meets the ownership requirements of subsection a. with respect to

the property; (ii) both spouses meet use requirements of subsection a. of this section with respect

to the property; and (iii) neither spouse is ineligible for the exclusion provided in subsection a. of

this section with respect to the property by reason of the limitations of subsection

c. of this section. c. The exclusion provided in subsection a. shall not apply to any sale or exchange

by the taxpayer if, during the two-year period ending on the date of sale or exchange,

there was another sale or exchange after May 6, 1997 by the taxpayer to which an election

made pursuant to subsection a. applied, except that this limitation shall not prevent

a husband and wife filing jointly from each excluding up to $250,000 of gain from

the sale or exchange of each spouse's principal residence provided that each spouse

would be allowed to exclude up to $250,000 of gain if each spouse had filed separately. d. If a sale or exchange to which this section would apply but for the failure to

meet the aggregate two-year period of ownership and use by the taxpayer as the taxpayer's

principal residence during the five-year period ending on the date of the sale or

exchange, and the sale or exchange is by reason of a change in place of employment,

health, or unforeseen circumstances, to the extent provided for a similar exemption

for federal income tax purposes pursuant to section 121 of the federal Internal Revenue Code of 1986 , 26 U.S.C. s.121 , then notwithstanding the amount of excludable gain allowed under subsection b. of

this section, the amount of gain excludable from gross income with respect to such

sale or exchange shall not exceed the amount which bears the same ratio to the amount

which would be so excluded under this section if such requirements had been met as

the shorter of (1) the aggregate periods, during the five-year period ending on the date of such

sale or exchange, the property has been owned and used by the taxpayer as the taxpayer's

principal residence, or (2) the period after the date of the most recent prior sale or exchange by the taxpayer

to which subsection a. of this section applied and before the date of such sale or

exchange bears to two years. e. (1) An exclusion allowed pursuant to this section shall be available if a husband

and wife file jointly for the taxable year of the sale or exchange and either spouse

meets the ownership and use requirements of subsection a. of this section with respect

to the property. (2) For the purposes of this section, in the case of an unmarried individual whose

spouse is deceased on the date of sale or exchange of property, the period the unmarried

individual owned and used the property shall include the period the deceased spouse

owned and used the property before the deceased spouse's death. (3) For the purposes of this section, in the case of an individual holding property

transferred to the individual in a transaction described in subsection (a) of section 1041 of the federal Internal Revenue Code of 1986 , 26 U.S.C. s.1041 , the period the individual owns the property shall include the period the transferor

owned the property. An individual shall be treated as using the property as the individual's principal

residence during any period of ownership while the individual's spouse or former spouse

is granted use of the property under a divorce or separation instrument as defined

in paragraph (2) of subsection (b) of section 71 of the federal Internal Revenue Code

of 1986 , 26 U.S.C. s.71 . f. The provisions of this section shall apply with respect to qualified tenant-shareholders

in cooperatives. g. The exclusion of gain allowed pursuant to this section shall not apply to so much

of the gain from the sale of any property as does not exceed the portion of the depreciation

adjustments (as deemed in paragraph (3) of subsection (b) of section 1250 of the federal Internal Revenue Code

of 1986 ) attributable to periods after May 6, 1997, in respect of that property. h. For the purposes of this section, the destruction, theft, seizure, requisition,

or condemnation of property shall be treated as the sale of the property. i. In the case of a taxpayer who (1) becomes physically or mentally incapable of self-care, and (2) owns property and uses that property as the taxpayer's principal residence for

periods aggregating at least one year during the five-year period described in subsection

a. of this section; that taxpayer shall be treated as using that property as the taxpayer's principal

residence during any time during such five-year period in which the taxpayer owns

the property and resides in any facility (including a nursing home) licensed by the

State or political subdivision to care for an individual in the taxpayer's condition. j. At the election of the taxpayer, the exclusion provided pursuant to this section

shall apply to the sale or exchange of an interest in a principal residence by reason

of that interest being a remainder interest in that residence, but this section shall

not apply to any other interest in such residence which is sold or exchanged separately. However, this subsection shall not apply to any sale to, or exchange with, any person

who bears a relationship to the taxpayer which is described in subsection (b) of section 267 or subsection (b) of section 707 of the federal Internal Revenue Code of 1986 , 26 U.S.C. s.267 or 26 U.S.C. s.707 . k. This section shall not apply to any sale or exchange by an individual if the treatment

provided by paragraph (1) of subsection (a) of section 877 of the federal Internal Revenue Code

of 1986 , 26 U.S.C. s.877 , applies to that individual for federal income tax purposes. l. In the case of property the acquisition of which by the taxpayer resulted under N.J.S.54A:6-9 in the exclusion of any part of the gain realized on the sale or exchange of another

residence, there shall be included in determining the period for which the taxpayer

has owned and used such property as the taxpayer's personal residence, the aggregate

periods for which such other residence had been so owned and used.