Knowing about Opportunity Zones (OZ) is surely beneficial for any investors in the US, especially after it was passed through the federal system in 2017. This provides spectacular incentives for investors, which encourages investments on economically bad unfavorable areas of the past.

That, in turn, provides big perks for investors, and to the economic condition of specified OZ areas nationwide. And that includes specified areas in Michigan as well.

 

What is an Opportunity Zone and what are its Benefits

The concept of opportunity zone circles on having the government choose specific areas all over the nation, in which investors could have federal tax incentives upon choosing to invest in OZs. OZs are areas which are economically unfavorable and requires enough investment to enhance.

The goal is to encourage investors to make such investment, thereby helping the economic condition of OZs to bloom as well.

 

How does Opportunity Zones work

Traditionally, any investors placing their capital on assets like real estate, stocks, car, and artworks among other sellable objects need to pay 37% worth of federal tax. However, when they opt to place their investment within an opportunity zone, they will receive a 10% tax deduction within 5 years, and 15% after 7 years.

They could even have the chance to totally eliminate tax after 10 years.

And that’s definitely great news for many investors, including in the real estate industry.

 

Benefits Opportunity Zone could give

This new federal tax incentives mainly circles on two large benefits; both for the investors and the opportunity zones. These big perks are:

 

Tax deduction for investors

Federal tax is a big headache for investors, especially with its significantly big amount. If you’re a real estate investor, for example, you need to increase your price tag to have sufficient income and have an amount for the tax, which could inevitably push away potential buyers.

Having a big chunk off the tax could help any investors to have more competitive price rates, thereby making their sales easier.  They could even allow their supposed tax money to another investment.

 

Boost up the Economic Condition of an OZ

When investors start to come in, an opportunity zone could begin developing through time. Investors could start investing in real estate, car dealership, stocks, and other assets in an OZ, which could help its economic condition to flourish.

In Pontiac, Michigan, for example, an OZ attracts more investors to come in a supposedly unfavorable place. However, because of the number of investors that starts to come, it’s expected to improve and develop like other places in the coastal regions.

At one glance, it appears to be a bad idea for investors, especially if an OZ is still relatively new. But with the tax deduction and the number of investors to come, the economic condition of such areas will surely bloom through the years.

As of now, there are more than 8,000 OZs all over the nation, with an estimated population of more than 30 million. Considering such a big number of people investors can possibly target, this concept is certainly a great deal for them to grab.

If you’re planning to invest in opportunity zones, you just have to know which area to go. In Michigan, there are two in Pontiac that you can choose.

Bring your investment with you, and expect long term benefits you will surely gain.

 

Image Source: Freepik

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