What is an Opportunity Zone?
An Opportunity Zone is “an economically-distressed community where private investments” — in other words, real estate development — “may be eligible for capital gain tax incentives,” according to the U.S. Economic Development Administration. Opportunity Zones are also referred to as Qualified Opportunity Zones or QOZ. - Bankrate
What is a capital gain tax incentive?
A capital gains tax is a tax on the growth in value of investments incurred when individuals and corporations sell those investments. When the assets are sold, the capital gains are referred to as having been realized. -Investopedia
An incentive, therefore, would be the high probability of a good return on the initial investment. Looking at Opportunity Zones in our own communities, where would think might be a great opportunity to capitalize on an investment in purchasing property, building a new home, settling in with your family for long-term gains. Gains don’t have to be in assets that are monetary. Our greatest resources can come from intangible sources like in the form of peace, joy, feelings of accomplishment, and legacies as seeds being planted for future generations.
Where do Opportunity Zones exist in your city or town? Some areas may be growing at a rapid rate and seeing much new development, but what will be the value of that space in years to come? What will the landscape offer to families and also to commerce? What then, is the value of the land aside from what is happening around it. How will you be able to add more value to the property in the future? Is the location significant in history or family values? If beauty is in the eye of the beholder, how do we see opportunity in investments? How do we determine the value of it based on the risks associated with the purchase and use? The criteria we set for ourselves as to what our hope for a good return looks like weighs in with more than the CAD value or the stats in market value or even in trends that studies and professional publications can determine with fancy algorithm methods and evidence in what is actually happening. An Opportunity Zone can sometimes be personal and well thought out and could make absolutely no sense to the next person. When making a big purchase such as a home, land, a boat, a car, or even a big move to another location, we weigh the risks with the desired accomplished result. Five years from now, will it matter for good or for not so good? What is the purpose? Purchasing in an Opportunity Zone should take much consideration and logic in the reasons why. Sometimes we want just to have but is this opportunity for you to have. Once you have acquired the property, then what? What now? A well-thought-out plan is a good thing. Keeping in mind, that we make plans and God laughs. Hopefully, God is laughing WITH us, and not AT us. Either way, laughing with God aint too bad of a ride. If God be with us in our choices, eventually it works out as it should even when we choose wrong and lose capital and time, it is still alright. The time is well spent in experience and in learning.
Gather your information, consider everything and choose however you please. In any business investment there will be risk involved. When looking at an Opportunity Zone within your area or any area, a good rule of thumb is to greatly consider what you value most. Appreciation and depreciation over time. A visionary is not always reactionary to stats and trends but is diligent in being proactive about seeing something more than what is purposed in its use by the majority. Sometimes, a Opportunity Zone has nothing at all to do with the definition of what it is. But WHERE IT IS and for WHOM. Consider your Why and consider it again.
Again, where are there Opportunity Zones in your area that you would consider worth the risk based on your vision and a good return on the initial investment?
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