2A —March 2023 — M id A tlantic Real Estate Journal
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M id A tlantic Real Estate Journal
M id A tlantic R eal E state J ournal Publisher, Conference Producer ..............Linda Christman AVP, Conference Producer ...........................Lea Christman Conference Producer .........................................Matt Wolpe Editor/Graphic Artist ......................................Karen Vachon Contributing Columnists .......................... Jeffrey Clayman, CPA, JD, LLM, Withum; Justin Draplin, Eclipse Cottages; Jack Fersko, Greenbaum, Rowe, Smith & Davis LLP; Dwight Kay, Kay Properties; Professor Ron Shaw
or investors who want to make profits on real estate, tiny homes in Opportunity Zones (OZs) offer a rare chance to make money while doing good. OZs are a government program intro - duced in 2018 that encourages capital investment in low-in - come areas. Companies and individuals who invest in OZs receive special tax benefits. Meanwhile, tiny homes are gaining in popularity. As the Motley Fool writes, “The global tiny home market is expected to grow by about 4% in 2022, with most of that concentrated in the U.S. The market is expected to hit $4.7 billion in global revenue by 2026.” Add tiny homes to OZs, with a dash of solar power, and you get success. A great investment Perhaps the most important reason to invest in tiny homes in OZs is that you can generate both usable solar tax credits and depreciation as well as Why Opportunity Zones and Tiny Homes are a Perfect Fit Justin Draplin F
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a tax-free capital gain when you sell the property. In ad - dition, investing unrealized capital gains in opportunity zones comes with additional tax benefits. According to the Tax Policy Center , these include the tem - porary deferral of taxes on pre - viously earned capital gains until the asset is sold or until the end of 2026. And, if you don’t sell that asset for at least 10 years, you won’t have to pay taxes on any capital gains earned from your investment in opportunity funds, which is the vehicle that allows you to invest in OZs. But perhaps the greatest benefit is that this
can be done as many times as you want. Tiny homes in particular are a great way to capitalize on OZs because they are less expensive to construct and maintain than traditional housing. According to Forbes , “A basic cabin kit can cost as low as $6,000 to $8,000... But HomeAdvisor estimates the average tiny home cost is about $45,000.” Tiny homes can be built in only a few days. Finally, tiny homes may be turned into rental units for long-term tenants or hired out as vacation homes. Own - ers may also choose to live continued on page 14A
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