RISMedia's Real Estate Magazine

FEB 2019

Real Estate magazine is the industry's leading source for real estate news and information since 1980. Published monthly by RISMedia, Real Estate magazine offers timely and relevant real estate news to the industry's top brokers and agents.

Issue link: http://remag.rismedia.com/i/1073841

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Page 29 of 110

RISMedia's REAL ESTATE February 2019 25 The new Opportunity Zone (OZ) tax incentive was created as part of the 2017 Tax Cuts and Jobs Act to en - courage investment in low- to moder- ate-income communities across the country through tax benefits, such as deferring tax on capital gains by mak - ing an investment in any of the desig- nated zones. So far, 8,761 communi- ties covering all 50 states, including the five U.S. territories, have been designated as opportunity zones, and they will keep this status for 10 years. The Investing in Opportunity Act has the potential to have a direct social and economic impact upon underserved communities, benefit - ing investors, communities and tax- payers alike. It is predicted to be a pivotal catalyst for economic recov - ery, business development and af- fordable housing, which could help countless individuals achieve finan - cial stability and economic growth for themselves and future generations. Real estate investors and high- net worth individuals are seeking to take advantage of opportunity zones to use their capital, which other - wise would be sitting on the table, to help their surrounding communi - ties. Thus, industry professionals, especially those in the commercial space, should be informed about the benefits and potential pitfalls of this new investment trend. BENEFITS • A Win-Win Situation. Aside from re- ceiving a tax break on their capital gains, investors have an opportu - nity to make an impact in their lo- cal communities. • Low-Cost and Low-Risk. This new legislation is a low-cost and low- risk opportunity for taxpayers. Investors bear the brunt of the risk for their originally deferred capital gains, although they do receive a tax reduction for long- term holdings. • Direct Impact for Economically-Dis - tressed Communities. Low-income and economically-distressed cities and towns—which include over 52 million American citizens—are benefited by having funds fun - neled directly into programs that can help with job growth, afford - able housing, entrepreneurship, and more. • Long-Term Investment. The Act encourages long-term investment by offering a reduction in capital gains taxes owned on their origi - nal investments after holding them for five to seven years. In addition, if investors have quali - fied investments held for more than 10 years, those assets will be exempted from further capital gains recognition over what was deferred originally. RISKS Opportunity zones are anticipated to be influential in putting capital into areas that need it most, which oth - erwise would have been left on the table; however, a concerted effort will have to be made to make sure that rural areas are not overlooked for investment in fear of small re - turns compared to more populated city centers in states such as New York and California. Revitalizing our distressed commu - nities will help bring more jobs to citi- zens—especially in the development of hospitality businesses—reduce crime rates, and provide resources and opportunities for more Ameri - cans to reach their full potential and improve their quality of life. RE Desirée Patno is the CEO and president of Women in the Housing and Real Estate Ecosystem (NAWRB) and Desirée Patno Enterprises, Inc. (DPE), as well as chairwoman of NAWRB's Diversity & Inclusion Leader- ship Council (NDILC). With 30 years of experience in housing, Patno is a champion for women's economic growth and independence. In 2017, Entrepreneur.com named her the Highest-Ranking Woman and 4th Overall Top Real Estate Influencer to Follow. For more information, please visit www.nawrb.com. The Future of Real Estate Investment: Opportunity Zones Commentary by Desirée Patno A ccording to the 2017 Distressed Communities Index by the Economic Innovation Group, one in six Americans, approximately 17 percent of the population, live in economically-distressed communities, and the average state has 15.2 percent of its population living in these struggling areas.

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