Why buy commercial real estate in a qualified opportunity zone?

On Behalf of | Jan 24, 2021 | Real Estate Transactions | 0 comments

When you decide to invest in commercial real estate as a way to pad your income after retirement, you may have a variety of choices when it comes to choosing a locale. Some locations, such as those in distressed neighborhoods, may offer you a tax advantage and a chance for rapid growth. The Internal Revenue Service notes that real estate located in a Qualified Opportunity Zone may provide you with these money-saving opportunities.

About qualified opportunity zones

Qualified Opportunity Zones are usually nominated by the state where they exist. The nomination must meet a few qualifications before you and other investors can take advantage of the tax break, such as certification by the United States Treasurer. These zones, which first appeared in 2017, may stimulate economic growth and job growth in the area and improve the quality of life for those who live in the area.

Advantages of QOZs

As an investor, a QOZ can provide you with several advantages. For example, you need not live in the zoned area to invest. You can receive the tax break if you invest a qualified eligible gain and then claim the deferment on your next tax return. If you are new to the concept of Qualified Opportunity Zones, you can ask your tax preparation service about how to claim these incentives when you file.

How to find a QOZ

If a Qualified Opportunity Zone investment for a commercial real estate venture interests you, there are several zoning maps available through the Internal Revenue Service. These maps may assist you if you are unfamiliar with territories that include QOZs but include other features that interest you as an investor.

Qualified Opportunity Zones can have long-term benefits for investors. These include increased deferred gains and tax exclusions depending on how long the owners hold the property.