Yardi Matrix Research Bulletin Explores New Investment Option


‘Opportunity zones’ arising from 2017 law could energize blighted areas and provide tax incentives

SANTA BARBARA, Calif., Sept. 28, 2018 – Directing money to “opportunity zones” could reward investors with capital gains tax advantages, according to a new research bulletin from Yardi® Matrix.

A provision of the Tax Cut and Jobs Act of 2017 allows investors to defer or avoid taxes on capital gains from any investment sale, including stocks, bonds or real estate, if the money is reinvested in an opportunity zone. The U.S. Treasury Department has certified more than 8,700 such areas.

Shareholders who hold their investments for five years will pay no taxes on 10% of the gains. After seven years, 15% of the gains will not be taxed. Shareholders who hold investments for 10 years can avoid paying taxes on all gains.

Opportunity zones “have the potential to draw capital from non-traditional sources—such as high-net-worth individuals, family offices and endowments—and to spur revitalization in blighted urban areas and tertiary markets,” the bulletin says.

Some aspects of the program, such as a “deemed disposition” clause requiring investors to pay taxes as of Dec. 31, 2026 whether or not gains were realized, could cool investor enthusiasm, as might several questions surrounding commercial property investments. Despite the uncertainty, the bulletin says, “fund managers are beginning to jump into the fray. At least 15 managers have announced capital-raising efforts,” including PNC Bank, Goldman Sachs and RXR Realty.

The Treasury Department is expected to clarify the program in coming weeks, although official guidance cannot be finalized until a public comment period ends.

Learn more about this potential investment vehicle in the research bulletin, titled “Tax Break Creates New Frontiers of ‘Opportunity.’”

Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, industrial, office and self storage property types. Email [email protected], call 480-663-1149 or visit yardimatrix.com to learn more.

About Yardi

Yardi® develops and supports industry-leading investment and property management software for all types and sizes of real estate companies. Established in 1984, Yardi is based in Santa Barbara, Calif., and serves clients worldwide. For more information on how Yardi is Energized for Tomorrow, visit yardi.com.