Real estate investors eyeing opportunities in the two cities Amazon selected for its massive HQ2 project might have an added incentive.
Thanks to a provision in the Tax Cut and Jobs Act of 2017, investors evaluating deals near Crystal City, Va., and Long Island City, N.Y. could avoid taxes on capital gains if the cash is reinvested into designated “opportunity zones.”
The provision’s goal is to economically uplift troubled areas that have above-average unemployment rates and income significantly below the regional median. More than 8,700 areas in the U.S. — including swaths nearby Crystal City and Long Island — have been certified by the Treasury Department as opportunity zones.
A recent nationwide analysis of 7.4 million residential properties and 259,000 home sales in more than 3,000 opportunity zones by real estate research firm ATTOM Data Solutions revealed valuable data for prospective investors in the area.
In the Washington, D.C., metro area, the average home price for homes inside opportunity zones was $362,413 — or 30 percent below the average home price of $520,394 outside of such zones, according to ATTOM.
In the New York metro, the average home price for homes inside opportunity zones was $341,774 — or 51 percent below the average price of $695,544 outside of t zones, according to ATTOM.
While lower than the national average of home appreciation in opportunity zones during the last five years — 72 percent — the Washington D.C. and New York metros have serious upside.
Since 2013, Washington D.C. homes in opportunity zones have appreciated 48 percent versus 21 percent outside such zones, according to ATTOM. In New York, homes in opportunity zones have appreciated 54 percent in opportunity zones versus 25 percent outside them.
ATTOM’s analysis includes 80 opportunity zones in the Washington, D.C. metro area with a total of 263,889 single family homes and condos and a total of 3,031 home sales in 2018, the company said. ATTOM looked at 65 opportunity zones in the New York metro area with a total of 129,826 single family homes and condos and a total of 1,442 home sales in 2018.