Jersey City has become an increasingly popular property investment location in recent years due to its proximity to New York City and attractive tax incentives from the state government. With over 70,000 residents and a booming economy, Jersey City offers property investors lower taxes, affordable prices and high rental demand compared to New York City across the Hudson River. Key factors driving Jersey City’s popularity for property investment include tax abatements for new developments, Opportunity Zones designated by the federal government, and a growing technology and financial services industry presence.
New Jersey has relatively low property taxes compared to the Northeast
New Jersey has much lower average property tax rates compared to other Northeastern states like New York, Connecticut and Massachusetts. For commercial property in particular, New Jersey’s effective property tax rate is just 2.4% – among the lowest in the country. This makes property purchases and ownership significantly more affordable compared to New York City, where combined city and state property taxes often exceed 4-5%. Along with other tax incentives, Jersey City’s relatively low property taxes create a favorable environment for real estate investors.
Developers in Jersey City can qualify for attractive tax abatements
The state of New Jersey offers lucrative tax incentives to spur development in certain qualified zones and locations. These programs including the Urban Enterprise Zone Program (UEZ) and Grow New Jersey Assistance Program allow developers and businesses to receive substantial tax credits, exemptions and abatements for investing and creating jobs in designated areas. Jersey City has over a dozen UEZ zones offering these incentives to property developers, making projects here much more financially viable.
Jersey City has several ‘Opportunity Zone’ tracts with tax advantages
The federal Opportunity Zone program offers capital gains tax relief to investors in qualifying low-income and distressed census tracts in the United States. Jersey City has nearly 20 census tracts labeled as Opportunity Zones eligible for the capital gains deferrals and other tax breaks. This federal incentive, combined with New Jersey state incentives, enhances Jersey City’s attractiveness as a real estate investment location with multiple tax advantages for developers and investors willing to commit capital.
Demand for housing remains strong amid population and job growth
With Jersey City’s population increasing nearly 20% since 2010 to over 270,000 residents, demand for quality housing units has risen substantially. Additionally, employment in Jersey City has expanded rapidly in recent years driven by the technology and financial services sectors – two industries centered in neighboring New York City. With high-paying jobs concentrated right across the Hudson River, rental demand is expected to continue rising across income levels in Jersey City’s property market, promising stable occupancy rates and cash flows for multifamily property investors.
In summary, Jersey City offers an affordable alternative location to invest in property compared to New York City, with lucrative tax incentives driving development and strong market demand from a growing population.