In DRU’s last article on opportunity zones, they introduced readers to what they are, how to invest, and a few examples. In the second part of the series, they answer a variety of questions regarding OZs that are commonly asked.
- Do opportunity zones create a pricing premium for properties in the designated areas?
- How can you find the perfect opportunity zone for your investment?
- What property type will benefit most from opportunity zones?
- Are capital gains required to invest in opportunity zones?
- What dates are most important for OZ investments?
Continue reading the second part of DRU’s Opportunity Zone series to get a better understanding of OZ’s and how they
Do opportunity zones create a pricing premium for properties in the designated areas?
Depending on the location, buyers can be motivated to pay higher closing prices in order to get tax incentives. The same goes for 1031 exchanges, tax incentives drive purchase prices higher. The most recent transactions for OZ properties have reflected a pricing premium with a 5% – 10% increase in the listed properties price. Each transaction will vary and depends on a few variables like the location.
How can you find the perfect opportunity zone for your investment?
Del Rey Urban has a dedicated team helping its investors find the perfect location for their opportunity zone investment and have access to exclusive OZ details. Connect with a local DRU professional for more information.
What property type will benefit most from opportunity zones?
As with any investment in real estate, the type of property (commercial, residential, etc.) an investor wants to put capital in is extremely dependent on location. This also stands true with OZs, but in theory, each property type will benefit from the program.
Are capital gains required to invest in opportunity zones?
If you are investing in an opportunity zone for the tax benefits, you can only use capital gains. It is ok to bring in outside capital from other sources, but it will not be eligible for tax benefits and must be separated for accounting purposes.
What dates are most important for OZ investments?
If an investor would like to qualify for the highest level of benefits from the OZ program they are advised to invest by 2019 since the reductions in tax liability are dependent on the time invested. In 2028, opportunity zone designations are set to expire, this means all investments MUST be made by that time to be eligible for tax incentives. Capital gains generated though the end of 2028 are eligible for investment; however, that does not mean an investor needs to dissolve the investment at that time. Each property invested into can enjoy the tax benefits until 2047. In the nearer term, deferred taxes on invested capital gains are due by 2026.