What New Jersey does differently to real estate investors.
New Jersey ignores most of the federal real estate playbook.
The state disallows bonus depreciation, caps Section 179 at a hundredth of the federal limit, gives no break for long-term gains, refuses to carry losses forward, and takes money from out-of-state sellers before the deed can be recorded. National tax guides skip all of it.
Federal rule against New Jersey rule.
This table is the whole point of the guide. Each row is a place where a strategy that works on your federal return does something different, or nothing at all, on your New Jersey one.
| The rule | Federal | New Jersey |
|---|---|---|
| Bonus depreciation | 100%, made permanent for property acquired after January 19, 2025 | Not allowed. Decoupled in 2002 for business tax, 2004 for income tax |
| Section 179 | $2,560,000 for 2026, phasing out above $4,090,000 | $25,000, with no carryforward of anything unused |
| Long-term capital gains | Preferential rates, generally 0%, 15% or 20% | No distinction. Taxed as ordinary income up to 10.75% |
| Capital losses | Carried forward indefinitely | Same category, same year only. Unused losses are lost |
| Withholding when you sell | None for a US seller | 10.75% of gain or 2% of price, whichever is higher, for non-residents |
| 1031 exchange | Gain and recapture deferred | Follows federal, but a GIT/REP form is still required at recording |
| Transfer cost over $1M | Nothing | Graduated percent fee, 1% to 3.5%, paid by the seller since July 10, 2025 |
Row two is the one that costs the most quietly. A cost segregation study can throw hundreds of thousands into a federal first-year deduction while New Jersey allows almost none of it, and the difference has to be tracked on Form GIT-DEP every single year. Miss those adjustments and your New Jersey basis is wrong by the time you sell.
What happens at the closing table.
Most of the money decisions here are already locked by the time a contract is signed. These three pages cover what New Jersey collects, on what form, and how much of it comes back.
The NJ exit tax
What New Jersey holds back at closing from sellers who live out of state, why the 2% floor catches people, and how the refund works.
GIT/REP forms
GIT/REP-1, -2, -3, -4 and -4A. Which one you file, which exemption box applies, and the one that stops working once the deed records.
NJ capital gains on investment property
No preferential rate, no loss carryforward, and a New Jersey basis that often differs from your federal basis.
The strategies, and how New Jersey treats each one.
Every one of these works in New Jersey. Each also carries a state wrinkle that changes the arithmetic, and that is what these pages cover.
Cost segregation
Bigger federal deductions now, plus the New Jersey adjustment every national cost segregation firm forgets to mention.
1031 exchange planning
Deferring the gain, the 45 and 180 day clocks, and how the exchange interacts with New Jersey withholding at the table.
Real estate professional status
Turning suspended rental losses into deductions against active income, with documentation that survives a look.
Syndication and partnership tax
K-1s your limited partners can hand to their own CPA without a phone call, plus capital accounts that stay accurate.
Property accounting and bookkeeping
Per-property books that make every strategy above defensible, and reporting your lender will actually accept.
Not sure which applies to you?
Tell Simon what you own and what you are planning. He will point you at the move worth making first.
Accelerating deductions, and the New Jersey add-back.
Federal depreciation rules changed again in 2025. New Jersey did not follow, so every study creates a federal number and a state adjustment at the same time.
What a cost segregation study costs
What moves the fee, the arithmetic that tells you whether it pays, and why the DIY versions struggle under examination.
Cost segregation on a short-term rental
A furnished rental reclassifies more than a bare one. What moves to 5, 7 and 15-year lives, and what has to be true first.
Bonus depreciation in 2026
One hundred percent is permanent federally for property acquired after 19 January 2025. New Jersey still allows none of it.
Airbnb income, and the two taxes people confuse.
One set of rules decides what you collect from a guest. A different set decides whether a rental loss can reduce your salary. These pages keep them apart.
The short-term rental rules
A seven-day average stay takes a property out of the passive category. Material participation is the test people fail.
NJ short-term rental and Airbnb tax
Sales Tax, the State Occupancy Fee and municipal taxes, and the marketplace rule that exempts most direct bookings.
NJ resident, rental somewhere else
Which returns you owe, where the credit for taxes paid elsewhere runs out, and what happens with a property in a US territory.
Exchange mechanics, and qualifying to use a loss.
The detail pages behind the strategies above, for when a deadline is already running.
Identifying replacement property
The 45-day and 180-day clocks, the three identification rules, and how DSTs and TICs are treated.
Choosing a qualified intermediary
Who the regulations disqualify, why a title company can serve when your accountant cannot, and what to ask before wiring.
Qualifying for real estate professional status
The 750 hours, the more-than-half test, the spouse rule that surprises couples, and what a defensible log looks like.
Why a New Jersey CPA and not a national one.
The national real estate tax firms are good at the federal side. Ask them about Form GIT-DEP, or which box on the GIT/REP-3 covers a partial exchange, and the answer gets vague.
Simon Klein has worked with more than 250 real estate investors and files these forms from an office in Howell. He is a member of the AICPA and the New Jersey Society of CPAs, licensed by New York State, and holds IRS representation credentials through the Tax Rep Network.
You work with him directly. More about Simon.
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