At LandTech, we are passionate about empowering developers to build new homes in areas where they will have the most impact.
Opportunity Zones are a prime example of how developers can generate revenue (and receive tax benefits) while aiding their surrounding communities.
In this article, we break down what Opportunity Zones are – and how developers can benefit from them.
What are Opportunity Zones?
Opportunity Zones are areas that were flagged by the US Treasury in December 2017 as facing economic distress.
The aim of Opportunity Zones is to incentivise economic growth in these areas and create more jobs in low-income communities.
To encourage development in these zones, tax reductions and deferrals are provided.
Opportunity Zones provide support for the community, whilst offering tax benefits.
Below, we break down some of the key benefits and challenges that come with Opportunity Zones.
The benefits of Opportunity Zones
As mentioned above, Opportunity Zones can provide benefits for both communities and property developers, such as:
Building more homes where they are needed
The purpose of Opportunity Zones is to stimulate growth in economically distressed areas, by creating new jobs and homes within the Community.
Developers are able to provide quality homes and help regenerate areas which may previously have been overlooked or neglected.
It’s worth exploring whether you could combine Opportunity Zones with the Live Local Act, as this would help to provide more affordable housing also.
Opportunity Zone tax benefits
As a developer, investing in a Qualified Opportunity Zone Property (QOZP) can have a number of potential tax benefits, including:
- Deferral of Capital Gains Tax
- Reduction of Capital Gains Tax
- No tax on capital gains realized on QZOP
It’s worth noting that you will need to invest in a Qualified Opportunity Fund for a set timeframe in order to receive tax benefits.
You can read more about this here.
How can property developers use Opportunity Zones?
If you’re already looking to develop in a certain area, it’s worth checking to see if there are any viable sites which fall within an Opportunity Zone.
Hopefully, you won’t have to adjust your strategy too much and you’ll get to benefit from a deferral or reduction in Capital Gains Tax. Plus, you’ll be helping to incentivize economic growth in the areas which most need new jobs and homes.
How can LandTech help?
Our site-sourcing and assessment tool lets you clearly see whether a site of interest sits within an Opportunity Zone in Florida and to gather all the information you need in a few simple clicks. This allows you to quickly establish whether you’re able to start the process of applying for tax benefits by developing here.
You don’t even have to leave LandTech to perform your further due diligence checks. We have key data, such as demographics, zoning, hazards, and ownership information so you can make a judgment fast on whether your site is viable and will meet your business criteria.
No more checking between multiple different platforms to find the core data necessary to make decisions. Access all the information you need in one place.
Want to find out more?
Take a look at how LandTech can help you to identify opportunities and bring value to your local communities.
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