As a Realtor in the Biloxi and Ocean Springs area's of the Gulf Coast, I've heard the term "GO-Zone" thrown around A LOT!! I never really paid too much attention to it because it seemed that everyone who was talking about it was doing commercial real estate and represented investors. NOW... that's me. So I had to do throw on the old pack, lace up the boots, hit the ground running and do a little recon. Like all good intel, it's useless if it isn't shared with those who need it, so here's what I have learned about the GO-Zone (also known as the Gulf Opportunity Zone).
Well first I can now say I see why Real Estate Investors love this opportunity, man can you make some serious dollar bills with this. The GO-Zone was created to help revitalize the areas affected by Hurricane's Katrina, Rita, and Wilma. The map to the left shows the areas in Mississippi that are GO-Zone areas. The key thing with the GO-Zone is it allows you to accelerate your depreciation of your investment assets. Where as before you have always had to write depreciation off over a 26.5 yr period, now you can take a 50% depreciation the very 1st year. In order to do this you must be a "real estate professional." If you want help with that term feel free to email me.
Here's the thing though, your asset must be "in-service" during that year, not just being built or land just purchased or whatever. Also, you can only take the 50% deduction on the "improvements" not the land, or if you bought an already existing property, you can only take the 50% deduction on the amount of the rehab cost.
Another great thing is this, usually depreciation is added in as income and is therefore taxable, GO-Zone deduction is not. It allows you to lower your income, thereby reducing your tax liability, every investor loves that don't they.
Please keep in mind I am NOT a tax professional and this is merely an overview of this program as I understand it, if you are looking to buy a property I would suggest you do the proper research to ensure it's eligibility (which I will gladly help you with) and also the tax benefits associated with it. And finally I'll leave you with this, as a Real Estate Investor, I wouldn't use the tax incentive to be the determining factor in my purchase choice, if the deal doesn't make sense without the GO-Zone incentive, don't do it. The GO-Zone tax incentive should just be a little extra icing on the cake, sorta like... when you buy a new car and they throw in floor mats for free.
BLOG DONE. CARRY ON!!