|Recently, I have gotten a few questions about Opportunity Zone investing in Seattle and I wanted to share some information on the subject.
An Opportunity Zone is an economically distressed area where new investment in that area may benefit from preferential tax treatment under the 2017 tax code.
Nearest to Seattle, large parts of the Central District and the International District have been designated as Opportunity Zones. In WA state, there are 139 similar zones (see map below) that will benefit from this program. The IRS has offered some guidelines which I have also included below.
Essentially, if an investor has a taxable gain from the sale of a capital asset (i.e. real estate or company stock) one can invest those proceeds within 180 days in an economically disadvantaged area via a Qualified Opportunity Fund. Individual investors can also create their own fund. The newly created fund would then have to re-develop the property; from what I gather the amount of re-development needs to equal the amount of the initial investment in the property.
The main benefit is a deferment and reduction in capital gains tax payments. Also, if the newly developed property is held for 10 years, the appreciation on that property is not taxed.
The economics of Opportunity Zone investing will make most sense for long term multi-family and commercial investors who identify properties in growth oriented areas.
I have added some articles below that may help make sense of these new rules; and from what I understand a lot of these regulations are still being hashed out. Any in depth exploration of this topic should be in consultation with a tax attorney.
If I can provide any information on specific properties or areas that may be of interest, do not hesitate to contact me.
Jeff Romeo (cell) 206.601.9995
Windermere Real Estate