Opportunity Zone Spells Opportunity - Spring 2019

Have you sold art, jewelry, stocks, real estate or other valuables and realized a significant gain – along with a substantial capital gains tax bill? To defer taxes on such gains, consider purchasing and improving property in an Opportunity Zone. Formed as part of the 2017 federal tax overhaul, rules for such zones are still being formulated. It appears investors will need to own Zone property for a decade to unlock their full potential as an investment, such holdings could still generate considerable yield from shorter hold periods, especially if development occurs within them. A word of caution, however: having lived thru the famed 1989 recession that began with corrections to bad tax law, I am always concerned when government adds tax incentives to the market. One potential concern here is that Opportunity Zones will increase property values and property will be purchased as part of a tax plan rather than on pure market fundamentals. I applaud the effort but the final cake is not yet baked. I often discourage laymen from venturing into the development realm, but in this case, the potential benefits of such Opportunity Zones are significant. As always, we encourage investors to seek competent advice from tax and real estate professionals before committing money. Should you have questions about Sarasota’s four designated Opportunity Zones or other real estate investments, please call us at (941) 951-2002. We at Harshman & Co. would be happy to assist you.