Opportunity Zones refer to particular geographic locations that the government has identified as being in need of more investment due to their economic distress. By offering tax benefits to investors, the goal is to promote economic growth and the creation of jobs in these areas. Investors may possibly postpone, minimize, or even completely avoid capital gains taxes by placing capital gains in Qualified Opportunity Funds (QOFs) within these zones, making them a desirable choice for individuals looking for long-term investment strategies.
The main thing to understand is that you will have to significantly improve the property to get the tax benefits. If you are looking solely at a current income property that will hopefully rise in value, then being in the Opportunity Zone is not particularly important. If you plan on redeveloping an underperforming, dilapidated, or value-add property, then the Opportunity Zone is definitely worth looking into.
If you would like further information on Opportunity Zones in Commercial Real Estate, please give Stark Accelerators Commercial Real Estate a call at 775-825-4400 or 208-722-2400.