It’s Tax Day – an unpleasant day if you still owe money to the IRS.
To make your day a little more enjoyable I’d like to share my thoughts on Opportunity Zones (OZ), and how you could build a profitable business around this tax incentive.
What Are Opportunity Zones?
Opportunity Zones are low income census tracts. Most of the OZ’s are in areas that could use investment to improve the economy.
The Tax Cuts & Job Act created an incentive to invest capital gains in OZ’s. It works like this (for specifics go to IRS.gov or talk to your tax advisor):
If you invest capital gains in a business or project in an OZ, the tax owed on the capital gains is deferred for up to 10 years.
After 5 years you get a 10% discount and after 7 years a 15% discount on the capital gains taxes you owe.
If you sell your investment after 10 years, the gain from the investment is tax free.
This is a long-term incentive. It allows investors to defer paying capital gains taxes and profit from tax free gains in the future, while supporting economic development in low income areas.
Who’s Interested in Opportunity Zones?
During an OZ event at Columbus Realtors, Mark Lundine from the Economic Development Division of the City of Columbus said he never got that many calls on a single program from investors looking for projects.
There’s a lot of capital gain out there. And investors are looking for projects to put this money to good use, to pay lower taxes and to do something good for our community.
How Can Agents Profit?
Even without your own capital gains to invest Realtors have a unique opportunity to develop a profitable niche around this tax incentive.
As a Realtor you should specialize in finding projects. This could involve land development, older buildings for redevelopment, or simply properties for companies who want to move their business to an opportunity zone.
Here’s a map of all OZ’s in the State of Ohio. Figure out how you can market to property owners in the designated census tracts, possibly list their properties or represent investors.
Tip: According to this article by Zillow home values in OZ’s have skyrocketed by as much as 25%.
Will you pursue this opportunity? Reply or comment and let me know.
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