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Real Estate Journal — Fall Preview — September 28 - October 11, 2018 — 19C
M id A tlantic
O pportunity Z one P rogram
By Stephen E. Fauer, ESA Environmental Consultants Opportunity Zone Strategies for Realtors, Developers and Investors
O
Educate them regarding the OZP. Create an incentive for them to sell. • Create new buyers. Identify clients who own assets and in- form them about the program. This program potentially cre- ates a better way for some people to plan their estates. Strategies for Developers • Identify which assets (both business and personal) can be sold now. • Determine which properties are in an Opportunity Zone. • Confer with a tax expert and devise a strategy for tax and estate planning purposes. • Determine the merit of cre-
ating a QOF versus investing in an institutional QOF. Strategies for Individual Investors • Identify which assets to sell. Remember, it can be any as- set (real estate, stocks, bonds, stamps, coins, art, cars, an- tiques, etc.). The greater the capital gain, the greater the potential savings. • People who own property in and OZ must decide whether to hold on to their property and do nothing, sell their property and pay tax on the capital gain, sell and do a 1031 exchange, or become an OZ investor and buy a new property in an Op-
n rare occasions, a fed- eral program comes along that offers a
portunity Zone. • Identify an expert industrial realtor to help facilitate a fa- vorable sale. • Determine the merit of creat- ing a QOF versus investing in an institutional QOF. The OZP is law, but it is in abeyance until the U.S. Trea- sury publishes the governing regulations. Those regulations are expected to be published in September or October of 2018. When that occurs, deals will happen quickly, and it’s been predicted that many Op- portunity Zone properties will increase in value as demand increases. Before all this takes
place, it would be wise to seek the advice of a tax attorney who has been following this subject closely. And, finally, savvy investors contact ESA Environmental Consultants BEFORE buying or selling a property to ensure their assets are properly protected from environmental hazards or li- ability. With nearly 30 years of experience helping buyers and sellers address brownfield properties, ESA is a critical component of your expert OZP team. Stephen E. Fauer is found- er and owner of ESA Envi- ronmental Consultants.
o n c e - i n - a - lifetime op- portunity to reap substan- tial rewards with a little f o r w a r d - t h i n k i n g strategy. The Opportunity
Stephen E. Fauer
Zone Program (OZP), part of the federal Tax Cuts and Jobs Act of 2017, will be a game changer for savvy realtors, developers, and individuals with appreciated assets looking to reinvest. To start, OZP investment monies must be derived from the sale of appreciated assets and, unlike a 1031 exchange, the sale of any asset can be used for reinvestment (e.g., real estate, stocks, bonds, stamps, coins, art, cars, antiques, etc.). The proceeds from the sale must be invested in a Quali- fied Opportunity Fund (QOF). The QOF must then invest no less than 90 percent of its funds in any Opportunity Zone in the country. The overriding purpose of the OZP is to mon- etize some of the estimated six trillion dollars in assets in the United States and invest the proceeds in impoverished areas around the country to create jobs, new companies, incuba- tors, and, in short, prosperity. Opportunity Zone investors can derive significant financial benefits from the program. Payment of capital gains on the sale of assets can be deferred up to 10 years. To get the full 15% basis point adjustment, the QOF investment must be made by December 31, 2019. When investment in a QOF is retained for at least 10 years, the taxpayer can exclude from federal income tax the entire gain on all appreciation of the QOF. The OZP will change the way people position their es- tates; unlike 1031 exchanges, the investor does not have to die to realize the full tax benefit. Strategies for Realtors • Industrial and commercial realtors should examine their portfolio of listings. They may already have properties listed in Opportunity Zones. If so, they need to notify the prop- erty owner and think about adding this important benefit to their sales prospectus. • Create new sellers. Identify those clients who own proper- ties in Opportunity Zones.
Ask ESA about hosting a free OPPORTUNITY ZONE INFORMATIONAL SEMINAR Contact Stephen Fauer at 732.469.8888 SFauer@AskESA.com
l Preliminary Assessments l Site Investigations l Brownfield Redevelopment Support l Hazardous Materials Management l Storage Tank Removal l Mold & Asbestos Services
ENVIRONMENTAL CONSULTANTS Our work is groundbreaking.
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