The GO Zone: Investor Qualification
For
investors considering taking advantage of the GO Zone Act and its
fifty percent bonus depreciation, the first question is one of
qualification. While it is true that properties must qualify
under the act, investors must qualify as well.
At the heart of the issue is this phrase:
"in the normal course of business". Those few words
within the act bar its application to would-be new investors.
 |
The GO Zone opens investment along
the Gulf Coast, for those who qualify. |
To determine investor qualification, the investor needs to talk with
his or her accountant, but an early rule of thumb would be this: does
the investor have a history of active investment in residential rental
or commercial real estate? A totally passive investment history
would most likely not qualify one under the Act.
Once it is determined that the investor
qualifies, however, the Act becomes a wonderful opportunity to make a
sound investment while sheltering other income. The bonus 50%
depreciation applies to new improvements to the property, whether it
be a newly constructed building or renovation done to an existing
structure.
Property bought for this purpose must be put in
use (commercial or residential rental) before the end of 2008.
The property could not be under contract before Katrina. Also,
although many flippers are suggesting their properties are GO Zone
qualified, an investor should be very careful and consult with an
attorney or accountant before assuming that a flipped property will
still qualify.
by: Wade Ogletree, Realtor®
COLDWELL BANKER, JME REALTY
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