Thanks to the Tax Cuts and Jobs Act of 2017, real estate developers all across the country have an incentive to invest in low-income communities as well as certain surrounding areas.
Individuals can receive tax benefits as well by investing in funds that help support this new development.
Through the Act, the federal government created what are known as Qualified Opportunity Zones. These zones are essentially regions of the country that are nominated by individual states as well as the U.S. Department of Treasury to be designated as areas in need of development.
Qualified Opportunity Funds (QOF) are the official investment vehicles that fuel this development. Individuals are able to invest in these funds and receive a temporary deferral on eligible capital gains taxes from other investment returns.
Developers can do the same by setting up their own QOF or by creating an entity that’s able to accept investments from other QOFs that third parties set up.
Since the program’s inception in 2017, $34.09 billion has been invested into it, all of which has gone toward 8,746 different areas that the federal government has designated to be economically distressed.
If you’re a real estate developer looking to either build new multi-family, residential or commercial property from the ground up – or significantly improve already-existing properties – then QOFs are a great avenue from which to draw.
These federal funds are also a fantastic opportunity for real estate developers provide something to underserved communities that they are currently not getting: The best-in-class internet connectivity they need to power their lives, provided by Elauwit, a boutique national telecom services company.
What’s Been Done So Far The Qualified Opportunity Zone program has only been around for five years, and already, it’s having a significant impact around the country. In 2022 alone, investors earmarked $9.68 billion into QOFs – the most of any year thus far.
Novogradac reports that the nearly $10 billion in investment went to 1,661 different QOFs. On average, each individual fund raised $26.7 million, though eight of those did the heavy lifting – with each raising at least $500 million.
A majority of the properties that have taken advantage of the funds available are either commercial development, multi-family development or some combination mixed-use development.
One such property is WestEnd Alexandria, a redevelopment of the Landmark Mall property in Alexandria, Virginia. The 52-acre site will be home to 4 million square feet of mixed-use properties when completed, including residential, retail and commercial such as Alexandria Hospital, which has plans to relocate its operations to the site.
The Opportunity It Provides Real estate developers can significantly benefit from QOFs, and they can then pass those benefits onto their future tenants by way of best-in-class space and the technology that helps to power it.
New multi-family and mixed-use development properties – as well as redevelopment projects that fit into these categories – can use the funds and the tax benefits they provide to invest in the network connectivity that today’s tenants demand.
When properties are being built or redeveloped from the ground up is the perfect time to integrate a new and robust network infrastructure that will serve the needs of not only your future tenants but of your business as well.
Not only does outstanding connectivity help MDU property owners solve operational challenges and save money, it can also serve as a potential revenue stream.
The federal government is incentivizing real estate developers to invest in Qualified Opportunity Zones and provide things such as the network connectivity that’s necessary in low-income and surrounding communities to help bridge the digital divide.
Don’t let this opportunity pass you by.
Work with Elauwit to Maximize Your Funds Real estate developers may look at the available money from QOFs and decide they want to invest it in projects other than network infrastructure. This could be especially true as many MDU property owners are concerned about a potential recession looming on the horizon.
But, when you work with a trusted network provider such as Elauwit, you won’t have to choose between a network backbone and other projects. You also won’t have to burn through all your cash to design, create and implement this network infrastructure.
We are able to offer our customers a financing program that gets them the network infrastructure that’s necessary for today’s modern properties while allowing them to preserve capital in uncertain times.
This is just another way that we at Elauwit have our MDU property owner partners’ best interests in mind. To find out more about how we can help you design, build, implement and launch your new robust network in a Qualified Opportunity Zone, contact us today.