New Jersey 'Exit Tax' (GIT/REP Forms) and the Bulk Sale Notice in a 1031 Exchange

The exit tax is an estimated income tax payment collected by the county clerk

The Division's Technical Bulletin TB-57(R), revised June 15, 2026, explains the rule: a nonresident individual, estate or trust selling New Jersey real property must make an estimated Gross Income Tax payment before the deed is recorded, whether or not there is a gain. The county recording officer may not record the deed without the right GIT/REP form and any payment due.

The amount on Form GIT/REP-1 is the federal gain times the highest rate, 10.75%, but not less than 2% of the seller's consideration. Consideration includes any mortgage the buyer assumes or takes subject to. The payment is credited on the seller's New Jersey nonresident return, so it is a prepayment rather than an extra tax.

A seller can also prepay before closing by taking GIT/REP-1, the payment and Form GIT/REP-2 to a Division Regional Information Center for a raised-seal receipt. Sellers that are corporations, partnerships, LLCs or other business entities are not subject to the estimated payment and check box 5 on GIT/REP-3.

GIT/REP-3 box 7a is the exchange exemption, and it goes with the deed

Form GIT/REP-3 lists sixteen seller's assurances; box 1 is for residents and boxes 2 through 16 apply to residents and nonresidents. Box 7a states that the gain is not recognized for federal income tax purposes under section 721, 1031 or 1033, with the applicable section circled, and that if it does not ultimately apply the seller will file a New Jersey return and report the gain. Box 7b states that the seller received only like-kind property.

The instructions require a nonresident claiming box 7 to show the value of the like-kind property received. The seller signs the declaration and gives the form to the settlement agent at closing; it is not sent to the Division. The clerk attaches it to the deed and will not record if it is incomplete or missing.

Nothing about GIT/REP-3 needs lead time, which is why it suits a deferred exchange. Your residence address on the form must be your actual home or place of business, not the property being sold.

Boot and a voided exchange each have their own 2% rule

If you receive cash or other non-like-kind property, TB-57(R) gives two choices. You can file GIT/REP-1 alongside GIT/REP-3, showing the greater of the consideration or the value of the non-like-kind property, and pay 2% of the nonexempt amount at recording. Or you can record with GIT/REP-3 alone and make an NJ-1040-ES payment on the nonexempt portion afterward.

With the first method, the exempt and nonexempt consideration on the two forms must add up to the consideration on the realty transfer fee form, RTF-1. With the second, the consideration on RTF-1 and GIT/REP-3 must match.

If the deferred exchange is voided, the GIT/REP-3 instructions put the duty on the qualified intermediary to complete GIT/REP-1 and remit 2% of the total consideration with an NJ-1040-ES voucher. Hypothetically, a $1,000,000 sale that fails would mean a $20,000 payment, before the actual tax on your return. Run your own numbers with your CPA; see options after a failed exchange.

The bulk sale notice protects the buyer, and it runs on its own 10-business-day clock

New Jersey's bulk sale law, N.J.S.A. 54:50-38, makes a buyer of business assets liable for the seller's unpaid state taxes unless it notifies the Division in time. The Division's bulk sale FAQ says real estate used for income or business purposes is a business asset, including vacant land held as one, and that a sale by a disregarded entity still requires notice. A one- or two-family residence owned by any combination of individuals, estates or trusts is exempt.

The buyer or its attorney files Form C-9600 with an executed copy of the contract by registered, certified or overnight mail; the Division must receive it at least 10 business days before closing. The Division answers within 10 business days with an escrow letter, a clearance letter or a request for returns. If it misses that deadline, the buyer is not liable.

An escrow is held by the buyer or its agent out of the proceeds and released when the Division issues clearance. The FAQ notes the escrow can exceed the purchase price. In an exchange, agree before closing that released escrow goes to the intermediary, since cash paid to you is boot; see what boot means.

Put both clocks on the exchange calendar

The GIT/REP form is a recording item handled at the table. The C-9600 needs the signed contract and ten business days, so it belongs on the calendar the day the contract is signed. New Jersey's income tax treatment of the exchange is on the New Jersey 1031 exchange page, and other states' lead times are on exemption filing deadlines by state.

• Contract signed: the buyer's attorney sends Form C-9600 and the executed contract by registered, certified or overnight mail.
• Before closing: decide whether any boot will carry 2% on GIT/REP-1 at recording or an NJ-1040-ES payment afterward.
• At closing: GIT/REP-3 with box 7a, and 7b if it applies, goes to the settlement agent with the deed and RTF-1.
• After closing: escrow release instructions name the intermediary, and the Division's clearance letter is kept with the exchange file.