Tax Write-Offs for Landlords in New Jersey: What Property Owners Need to Know

Owning rental property in New Jersey can be a powerful wealth-building strategy especially when you understand the tax write-offs available to landlords. From property taxes to depreciation, the IRS allows rental property owners to deduct many expenses that can significantly reduce taxable income.

Whether you own a single rental or a growing portfolio, here’s a clear breakdown of the most important tax deductions for New Jersey landlords and how to use them wisely.

1. Mortgage Interest

One of the largest deductions for landlords is mortgage interest on rental properties. This includes:

• Interest on loans used to purchase the property

• Interest on refinances

• Interest on home equity loans used for rental property improvements

✔️ Only the interest portion is deductible — not the principal.

2. Property Taxes (New Jersey Specific)

New Jersey property taxes are among the highest in the country, but the good news is they are fully deductible for rental properties as a business expense.

Unlike owner-occupied homes (which face SALT deduction caps), rental property taxes are not subject to the $10,000 limit.

3. Depreciation

Depreciation allows landlords to deduct the cost of the property over time even if the property is increasing in value.

• Residential rental property is depreciated over 27.5 years

• Applies to the building (not the land)

• Can include major renovations and capital improvements

💡 Depreciation is one of the most powerful tax advantages of owning rental property.

4. Repairs and Maintenance

Everyday repairs and maintenance are deductible in the year they occur, including:

• Plumbing and electrical repairs

• Painting

• HVAC servicing

• Roof repairs (not replacements)

• Pest control

• Landscaping and snow removal

Important: Repairs are different from improvements. Improvements must be depreciated over time.

5. Capital Improvements (Depreciated)

Large upgrades that add value or extend the life of the property must be depreciated, such as:

• New roof

• Kitchen or bathroom renovations

• New HVAC systems

• Window replacements

• Additions or structural changes

These deductions are spread over multiple years but can still provide meaningful tax savings.

6. Insurance Premiums

Landlords can deduct premiums paid for:

• Property insurance

• Liability insurance

• Flood insurance (important in some NJ markets)

• Umbrella policies related to rental activity

7. Utilities Paid by the Landlord

If you cover utilities for your tenants, those costs are deductible, including:

• Water and sewer

• Gas and electric

• Trash removal

• Internet or cable (if included)

8. Professional Services

Fees paid to professionals are fully deductible, including:

• Property management fees

• Accounting and bookkeeping services

• Legal fees related to the rental property

• Real estate consulting and advisory services

This is especially important for landlords with multiple properties or complex portfolios.

9. Travel and Mileage

If you travel to manage, maintain, or inspect your rental property, you may deduct:

• Mileage driven to and from the property

• Parking fees and tolls

• Travel related to purchasing supplies or meeting contractors

📍 This is particularly relevant for NJ landlords managing properties across multiple towns or counties.

10. Home Office Deduction (If Applicable)

If you manage your rental business from home and have a dedicated workspace, you may qualify for a home office deduction, including a portion of:

• Rent or mortgage

• Utilities

• Internet

• Property insurance

11. Advertising and Marketing

Costs associated with finding tenants are deductible, including:

• Online rental listings

• Photography

• Signage

• Marketing platforms and software

12. New Jersey-Specific Considerations

• Rental income is taxable at both federal and NJ state levels

• Local registration fees and inspection costs are deductible

• NJ does not allow certain federal pass-through benefits work with a tax professional familiar with NJ rules

Why Proper Planning Matters

Many landlords leave money on the table simply by not tracking expenses or understanding what qualifies as a deduction. Strategic tax planning can improve cash flow, increase ROI, and make expansion more feasible.

Working with a knowledgeable real estate professional and CPA especially one familiar with New Jersey’s rental market can make a significant difference.

IRS Tips on Real Estate Income and Record Keeping

Everyone’s tax situation is unique, so it’s best to review these items with a CPA to confirm what applies to you.