Will Zoning Laws Bring More Equity to Miami
How “Opportunity Zones” in Miami are giving way to what could be the largest economic development in the United States.
Miami may be experiencing a new beginning of sorts as new economic developments proliferate in various areas of the city thanks to changes in zoning and the rise of what are being called “Opportunity Zones” that have started to emerge. These zones are giving way to what could be the largest economic development in the United States, if urban experts are correct in their prediction.
With these Opportunity Zones, tax incentives are provided to investors so they can re-invest their unfulfilled capital gains into similarly named Opportunity Funds that are aimed at investing into Opportunity Zones; largely low-income areas, based on designations by governors. The sites are selected by the state and must then receive approval from the Federal government. Out of more than 400 Opportunity Zones found throughout the state, nearly seventy of them are located right here in Miami-Dade County.
Opportunity Zones serve as economic development tools, intended to encourage economic development by offering tax benefits to investors. To further elaborate on these zones, they allow investors to defer tax on previous gains until the earlier of the date on which an investment is sold or exchanged, or December 31, 2026, provided that the gain is reinvested in what’s called a Qualified Opportunity Fund. Should it be held for the entire period of ten years, the tax reduction equals about 15%. Furthermore, if the investor holds the investment in the Opportunity Fund for the ten year period, the investor would receive eligibility for an increase in basis equal to the fair market value of the investment based on when the investment is exchanged or is sold.
The economic viability of the various locations in Opportunity Zones make sense since in several cases they are part of an urban area that is undergoing redevelopment. Take for example the Downtown Miami area, where there are several locations located near the Opportunity Zones that are in the process of being developed for mixed-use purposes that are practically just blocks from major existing developments.
As Opportunity Zones and zoning laws changes throughout, the opportunities (no pun intended) are rife for a massive influx in some of the city’s most notable areas. These include the Brickell area and its upscale high-rises, aforementioned Downtown Miami and its upcoming projects, as well as its neighbors like Miami Beach where new developments remain much in demand. As this equity builds, a greater number of investors will set their sights on the Magic City, creating more demand for luxury real estate.
With industry experts predicting a wave of transactions throughout 2019, expect the change in zoning laws to bring a tremendous amount of positive activity as the year progresses. What neighborhoods in Miami and beyond do you see eventually building the largest amount of equity this year?
** This update is by The Jills Zeder Group team which includes Jill Eber, Jill Hertzberg, Danny Hertzberg, Hillary Hertzberg, Felise Eber, Judy Zeder, Nathan Zeder and Kara Zeder Rosen. Call 305-341-7447 for more information about The Jills Zeder Group, Miami Beach real estate, or the many beautiful homes in Miami.