Even the tax code is not always black and white.I would lean towards advising you to go ahead and claim the expenses.

If it's zoned as a SFH and only has one APN lookup your local laws on 'Accessory Dwelling Units' it's entirely possible the conversion was unpermitted and you'll get in trouble/have to rip out the 2nd unit if any code inspector finds out about it. 

This is why I wanted to write this thread.The landlord tenant laws (I'm speaking of what constitutes a rooming house for example) in NJ are a mish mash of complex codes and case law that most real estate attorneys are not able to navigate.

After spending some considerable time searching through government websites, I haven't yet been able to crack the code. 

Specifically I invest in Wilmington, Delaware and like many cities around the country things can be very different block to block let alone at a city or zip code level.

I live 40 miles away, so I called the owner of the biggest plumbing co in the city and he and 2 techs drpped everything to get to the property within 10 minutes of my call.I had put a garage outdoor access remote on the outside of the house.. they couldn't get in thru that because THE POWER WAS NOW OFF.Luckily i had put a coded door knob on the kitchen door that opens to the deck-- i gave them the code and they were inside instantly.The water heater was STILL SPEWING WATER full blast in a stream so strong it was hitting the second story ceiling and hitting the ELECTRICAL PANEL also located in the garage and that's what had knocked out the power .The plumbers immediately turned off the inside water main cutoffand sent me photos of the EMERGENCY SITUATION the pm so calmly let me know about by email an hour earlier.i fired the pm co that instant and got on the phone to start farm (my rental policy ins co) whiledriving an hour to the property.i also called the city's best WATER EMERGENCY REMEDIATION COMpany while en route.When i got there, the water was turned off ( finally)the drywall ceiling had fallen in, the light fixtures destroyed, the garage door open case was HALF FULL OF WATER and there were 1000s of mold blooms on every surface and hundreds of stacks of spiky growing black mold (looked like iron fiilings we used to play with in that game we all had as kids where u use a magnet and drag the iron filings around to put hair and a mustache on the bald guy cartoon photo) the mold spikes were 1.5" tall on the woot railings and stairs going into the house, on all of my beautiful built in wooden garage shelves--- what a mess-- like the streets of Beirut after the bombs went offand I don't have allergies -- but i could not even STAND inside the garage because the WET MOLD MILDEW SMELL was so strong it instantly gagged me and gave me a headache and i couldn't breathe.So here Ewe are on Jan 17 and now i know that the BEST rental dwelling policy dies NOT COVER MOLD REMEDIATION AT ALL ( so far $14,000) but it does cover water damage with a $2500 deductible...

Hi @Sam Wilson,Google search "poorest zip code in [state name]" and find out who is doing mortgages there.

The first two lines read:(1) As used in this rule, "advertising" and "advertisement" include all forms of representation, promotion and solicitation disseminated in any manner and by any means for any purpose related to professional real estate activity, including, without limitation, advertising by mail; telephone, cellular telephone, and telephonic advertising; the Internet, E-mail, electronic bulletin board and other similar electronic systems; and business cards, signs, lawn signs, and billboards.(2) Advertising by a licensee, in process and in substance, must:Line two makes it seem like regulation is applied if you are advertising as any form of real estate professional.

Does plumbing and electric need to be brought up to code?  

@Jeff Stansberry you need to do some research on "frayser" and that zip code before you buy.