What is an Opportunity Zone and How Do They Work?

March 20, 2019

Opportunity Zones have been gaining attention in the world of commercial real estate. As a commercial real estate investor, there are many aspects of Opportunity Zones to be aware of as you move forward. Here is what you need to know about the options available through this program that may enable you to substantially reduce your income tax bill, while providing an economic boost to a distressed community.

A Brief History of Opportunity Zones

Opportunity Zones were added to the tax code as a result of the 2017 Tax Cuts and Jobs Act. The zones signify economically distressed communities, and the intent of the new tax break benefits is to stimulate economic development and job growth in these areas through investment in commercial real estate. Governors and the U.S. Department of Treasury designate which low-income areas are classified as Opportunity Zones. The first Opportunity Zones were designated in April 2018 and covered regions in 18 states. Today, Opportunity Zones have been designated in areas of all 50 states, as well as areas in the District of Columbia and five United States territories.

Commercial Real Estate Benefits

There are several key federal tax advantages offered for investing in Opportunity Zones. Most importantly, investors can defer and/or reduce capital gains through a qualified Opportunity Fund. Opportunity Funds are investment vehicles that devote at least 90% of holdings into partnerships, businesses, or properties within qualified Opportunity Zones.

Key benefits are:

  • Defer capital gains tax on asset sales by investing them into these Opportunity Zones
  • Eliminate a portion of those capital gains taxes by holding the Opportunity Zone investments for a significant period of time
  • Eliminate capital gains taxes once the Opportunity Zones asset is sold

Caton Commercial: Representing Opportunity Zones

Caton Commercial Real Estate Group is dedicated to helping commercial real estate investors make an impact in these communities by listing qualified Opportunity Zone properties in Joliet, Country Club Hills, and Maywood. Our featured Opportunity Zone properties include:

  • Former Applebee’s  in Country Club Hills: 5,553 SF free-standing building with a large parking lot containing 87 parking spaces. This property includes a large monument sign with excellent visibility.
  • Former School  in Joliet: 40,000 SF brick building on a 1.9 acre lot that includes office space, elevator, and warehouse. This property is perfect for an educational institution or a corporate headquarters with a light manufacturing facility.
  • Cathedral and Rectory  in Joliet: 38,000 SF mixed-use space with potential for entertainment, retail, and multifamily use. The cathedral building offers two stories with 8,000 SF on each floor, and the rectory building offers three stories with 4,000 SF each.
  • Repair Shop  in Maywood: 3,775 SF automotive repair and tire shop equipped with three bays and four lifts. This shop is located in a high traffic area.

Contact Caton Commercial Real Estate Group today to learn more about how you can take advantage of these tax benefits and be a part of stimulating economic growth by investing in one of these qualified Opportunity Zones. To learn more about the above available properties, visit our current  listings  or  contact us  today. We look forward to partnering with you!

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