Photo by Gary Kauffman
FEBRUARY 2019 • THE CSRA’S MONTHLY BUSINESS MAGAZINE
What will businesses face in the year ahead? Pages 26-27
NEW INCENTIVE
DOWNTOWN OPPORTUNITY ZONES CREATE WIN-WIN FOR INVESTORS, CITY By Gary Kauffman If the idea of not paying tax on a capital gain for seven years and then receiving a 15 percent tax discount on that gain sounds appealing to you, then Augusta has an opportunity for you in 2019. Much of downtown Augusta has been labeled as an Opportunity Zone, a designation that comes from the tax reform package passed in December 2017. Each state is allowed to designate areas that are considered economically distressed. The goal is to give people an incentive to reinvest their capital gains, helping both the investors and the city. “When you have a downtown like Au-
gusta that’s depressed, people don’t want to invest in it because their customers are in suburbia,” said Ryan Martin, sales associate for Meybohm Commercial Properties. “Opportunity Zones try to incentivize investments in those areas.” While parts of downtown Augusta, particularly upper Broad Street, have recently been bustling with activity, there are still plenty of areas that could use a helping hand. Part of Augusta’s Opportunity Zone extends from the Savannah River to Walton Way and from Lake Olmstead to 13th Street. Another section is more irregular, roughly from Telfair Street south between 15th Street and Fifth Street for
part of it and extending south into the Laney-Walker and Bethlehem districts. The area from the river to Telfair Street, from 13th Street to Gordon Highway, is not included. The medical district is also not included.
How Opportunity Zones work
(The following is a basic idea of how Opportunity Zones can benefit investors. For specific details, consult tax and investment professionals.) Before the tax reform bill, there were limited options to avoid paying taxes on capital gains. Investors sometimes rolled gains over into a like-kind 1031 Exchange, but that also limited options.
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For example, if you bought something for $100,000 and sold it for $1.1 million, you would have a capital gain of $1 million. You could defer paying the tax on the gain by rolling it over in a 1031 Exchange, but that had to be an exchange of a like character or nature: If you sold property, the investment had to be in property; if stocks, in stocks. “It is limited,” Martin said. “An Opportunity Zone is similar to a 1031, but there is no limit in the exchange.” That means that even if the $1 million gain came from selling collectibles, it could now be used to buy commercial See OPPORTUNITY on Page 2
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