The Benefits of Opportunity Zones to Commercial Real Estate Investors

Around a year ago, the Trump administration deployed a program for Opportunity Zones to assist in the development of businesses and housing in various distressed areas throughout the United States. Opportunity Zones were included as part of the Tax Cuts and Jobs Act, but the program was given very little attention. The ultimate goal of the Trump Administration is to create Opportunity Zones which will create jobs and bring new businesses to these locations while also giving incentives to entrepreneurs. What many people overlooked, however, is that designated Opportunity Zones offer a number of benefits to commercial real estate investors with a focus on multifamily properties.

Tax Advantages and Opportunity Zones

Opportunity Zones gives commercial real estate investors a tax deferral on gains until the property is exchanged, sold, or the deadline of December 31, 2026. Additionally, property investors can exclude up to ten percent of the original gain after five years, and fifteen percent after seven years. Commercial real estate investors who hold onto their properties for at least ten years can receive a permanent exclusion of taxable gains when those properties are exchanged or sold. As always, property investors are advised to talk with accountants and attorneys to understand the minutiae of how the program works and any specific provisions.

Multifamily Property Investment Strategies

One of the big reasons Opportunity Zones have commercial real estate investors excited is that they allow people to form long-term investment strategies instead of following market trends or reading tea leaves. Opportunity Zones are designed for designated areas that are going to experience major growth over the next few years. For those with multifamily properties in Opportunity Zones, the program translates to high occupancy rates, and potentially lucrative revenue streams. From Los Angeles to Brooklyn and many areas in between, Opportunity Zones allow property investors to improve their bottom line.

Not Your Typical Multifamily Stimulus Program

Opportunity Zones are not restricted to low-end multifamily properties. Since the program is designed to redevelop distressed communities, commercial real estate investors are purchasing everything from affordable student housing to large complexes that can be renovated and turned into luxury apartments. The goal is to uplift designated areas, so some places in major cities are seeing everything from multifamily apartments with shared workspaces to buildings with gyms, spas, yoga centers, cafes, and more. Opportunity Zones benefit everyone involved and need property investors with vision, creativity, and a bead on what their target tenant segment wants from a living space.

CounselPro Lending provides funding solutions for commercial real estate investors looking to take advantage of the benefits offered through the Opportunity Zones program. Whether you need financing for acquisition, renovations, or if you are building a new structure on land locating in an Opportunity Zone, we can help. Contact CounselPro Lending today to learn more.

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