Huge Real Estate Investment Incentives in the Go Zone for Investors
By now you have probably heard the term “Go Zone” tossed around in the real estate 
investing world in the past few years. So, what is this “Go Zone” and why should you know about it?
In basic terms, the Go Zone’s are the areas affected by natural disasters such as hurricane Rita, Wilma, Katrina, etc. The IRS has shown their nicer side and provided excellent incentives for people affected by these disasters… and people who want to invest in these areas.
The IRS has doled out all kinds of incentives and tax breaks such as bigger education credits, extended tax deadliines, bigger charitable giving deductions, and much more. But… the one that you as a real estate investor should pay attention to is the whopping additional 50% depreciation allowance for investors purchasing property (not just real estate) after August 27, 2005. As long as the property is either “nonresidential real property” or “residential rental property” (which pretty much means just about everything you would want to invest in) you can partake in this rare IRS “gift”.
What does this mean to you and your bottom line? It means a huge tax deduction in the first year and possibly a huge tax return.
What are the requirements you need to meet?
- Place the property in service after August 27, 2005 but before 2009 (for real property)
- Can be: tangible property depreciated under MACRS system, water utility property, computer software readily available to general public, qualified leasehold improvement property, and…. NONRESIDENTIAL REAL PROPERTY AND RESIDENTIAL RENTAL PROPERTY.
Some people have been saying that it is just a 50% depreciation in the first year… but it is an additional 50% depreciation in year 1. You can depreciation your standard rate plus the 50%!
Don’t get too excited thought. Just like with any IRS “gift” there is a slight catch. If you choose to take the 50% depreciation and the IRS takes away the “Go zone” designation for the area you now own in, you may have to “recapture as ordinary income any excess benefit you received from claiming the special allowance”. What the IRS giveth, they taketh away.
Either way, this extra depreciation could mean big bucks in year one.
Here are the hot areas of the Go Zone right now that a ton of real estate investing dollars are going into.
- Biloxi, Mississippi (HUGE BOOM RIGHT NOW!!)
- Baton Rouge, Louisiana
- New Orleans, Louisiana (still a bit slow, but picking up)
Truly, there are Go Zone areas all over the Gulf Coast including Louisiana, Mississippi, Florida, and Texas. So, dig deep and find that investment property that makes sense and take advantage of this nice incentive.
Go Zone Resources:
If you like this post, please subscribe to the RSS Feed.
Hey, my name is Trevor and I'm the founder of The REI Brain and a real estate investor since the age of 21. Right now, my focus in real estate investing is multi-family income properties and I have plans on moving more into the commercial real estate investment world in 2008 and beyond. 
Leave a Reply