What is an Opportunity Zone?
An economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. These locations have to be nominated for this designation by the State and certified by the Secretary of the U.S. Treasury.
Opportunity Zones are designed to spur economic development by providing tax benefits to investors. Investors must purchase a property before December 31, 2026.
Blue = Opportunity Zone
-Investors that hold the investment in the Opportunity Zone for at least five years can reduce their tax bill on the deferred capital gains by 10%.
-This reduction increases to 15% for investors that hold the investments in the Opportunity Zone for at least seven years.
-Investors that hold the investment in the Opportunity Zone for at least ten years will not be required to pay federal capital gains taxes on any gains realized from the investment in the Opportunity Zone. (Speak to your tax advisor for more specific details and actual tax advice)
Basically- Buy it before 2026, improve it, hold onto it for 10+ years and you don't have to pay any capital gains tax! I don't mind traditional IRA's and 401K's and frankly, any financial tool you can legally invest in that gives you a great return is just fine by me. Since I have a real estate background and I'm and AZ Native, I am absolutely thrilled at the fact that something like this now exists. Everyone always says they want to "give back" to their neighborhood and community. Well, this is a fantastic way to help revitalize some less attractive areas of town while simultaneously helping yourself by avoiding a huge tax bill when it's time to sell.
Opportunity zone investing is still in the very beginning stages and hasn't really landed on the radar of most investors or even REALTORS® for that matter- it's smart to start picking up these properties before they start to really inflate prior to the December 31st 2026 deadline.
Background:
Opportunity Zones were created through the Investing in Opportunity Act, which was stuffed into the Tax Cuts and Jobs Act in 2017. There was wide spread bipartisan support of the program, more than 100 legislators sponsored the bill across both houses of Congress. It was heavily backed by Senators Tim Scott and Cory Booker, the two Senators who introduced the Investing in Opportunity Act to the Senate, with Sean Parker, yes THE Sean Parker, the ex-Napster entrepreneur. He founded the Economic Innovation Group, an independent think tank that helped create the framework of the system.
Opportunity Zones were created to stimulate private investment within certain communities in exchange for capital gain tax incentives. Instead of States and Cities spending mass amounts of taxpayer money to develop countless low-income project-type housing across the US, this system opens the doors to for anyone that is considering investing into real estate right now. More specifically, purchasing long term rental properties to generate cash flow. Both multi family and single family properties are what we are going to focus on. There are plenty of other commercial opportunities as well- I just like to stick with what I know and stay in my own lane. I have plenty of referrals for those other avenues if you are interested- just ask.
Where are all of the Opportunity Zones in the Valley of the Sun?
Check out this sweet interactive map, if you want to zoom in and out all around the US. https://opportunitydb.com/tools/map/
Where can I find all of the properties for sale within an opportunity zone, but without doing countless hours of work to locate them?
Well, I've gone ahead and done all the heavy lifting for you! I've spent over 5 days compiling data and painstakingly outlining all the areas that qualify so YOU have access to an updated list at your fingertips whenever you like. If you would like a more specific search- please contact me and I will be more than happy to provide it and set you up with an Auto Search so you can see everything that hits the market in real time.
Click on this link if you want to see every Single Family Home, Condo and Townhome for sale within an Opportunity Zone.
Click on this link if you want to see every Multi Family Home/Duplex for sale within an Opportunity Zone.
A lot of information was obtained from the FAQ section on the IRS website and various other financial outlets. Please visit the link below for much more detailed information and please understand that I am not a CPA or tax advisor, just a regular ole REALTOR®, so please always consult your professional tax and financial advisor before making any financial investment. https://www.irs.gov/newsroom/opportunity-zones-frequently-asked-questions
Nick Cianciola
Vendita Realty- Owner
(602) 332-8337
