Essential Tax Tips for Real Estate Investors in East Brunswick and Surrounding Areas

If you're a real estate investor in East Brunswick or anywhere in Middlesex County, you're already in a thriving market. Property values have been climbing steadily, and rental demand remains strong. But here’s a question: Are your tax strategies working as hard as your properties?

Real estate is one of the most powerful paths to long-term wealth—but without smart tax planning, a big chunk of your profits could go straight to the IRS. We specialize in helping local investors like you optimize returns, reduce liability, and stay IRS-compliant.

Here are the tax-saving strategies every East Brunswick investor should know.

"I founded Demian & Company, LLC with a simple goal: to make your financial life stress-free. My team and I are personally committed to providing the tailored solutions—from taxes to payroll—you need to grow your business and achieve your goals."

1. Understand Your Local and Federal Tax Landscape

While every investor deals with federal taxes, New Jersey brings its own set of rules to the table — especially in municipalities like East Brunswick.

You need to watch out for:

• Local property taxes, which in East Brunswick average around $9,800 per year (as of 2024).
• Realty transfer fees, which apply when you sell a property—ranging from 0.4% to 1% depending on the sale price.
• New Jersey state income tax on rental income and capital gains.

These layers make local expertise essential. Strategies that work in another state may backfire here. That's why having a tax advisor who knows New Jersey and your township is critical.

2. Take Advantage of Every Deduction You’re Entitled To

Far too many investors miss valuable deductions simply because they’re unaware or don’t keep clean records.

Here’s what you should track and deduct:

1. Mortgage interest – One of the biggest deductions available.
2. Depreciation – A powerful tool that spreads the cost of your property over 27.5 years.
3. Repairs (but not improvements) – Replacing a leaky faucet? Deduct it. Renovating a kitchen? That’s capitalized.

Example: If you spent $2,500 on roof repairs, that can be deducted in full in the year it was done—lowering your taxable income immediately.

3. Choose the Right Business Structure

Still reporting rental income on your personal return? That’s fine if you have one property—but it could expose you legally and financially.

Here’s why many East Brunswick investors set up an LLC:

• Liability protection – Keeps your personal assets safe from lawsuits.
• Pass-through taxation – Income passes through to your personal tax return without double taxation.

Tip: In New Jersey, forming an LLC costs around $125, plus an annual report fee. But the protection and flexibility often make it well worth it.