Senior Housing Opportunity Zones For Investors

A new investment opportunity is emerging in economically distressed communities, that could help middle- and lower-income seniors who need Assisted Living, Memory Care and Skilled Nursing facilities. There is a new tool that allows investors to reinvest their gains into low-income urban and rural communities designated as qualified opportunity zones. This program allows for substantial tax incentives to senior housing investors such as deferred taxes, decrease in tax on capital gains, and eventually permanent exclusion of tax on capital gains.

Created by the 2017 Tax Cuts and Jobs Act, Qualified Opportunity Zones are designated for 10 years. During this time investors can defer tax on any prior gains until no later than December 31, 2026, so long as the gain is reinvested in a Qualified Opportunity Fund. These funds can only be used if the property is an operating business. This allows the investor to be eligible for an increase in its basis equal to the fair market value of the investment when it’s sold.

Opportunity Zones Qualifications

Note that in order to qualify, investors must only reinvest 100 percent of the value of the building— not the land. This means that investors can redevelop preexisting buildings in metropolitan areas into Assisted Living, Memory Care facilities.  Opportunity Zones can substantially influence senior housing and assisted living industries for developers and operators trying to tap into the underserved middle income market.

These tax incentives will allow for investors in senior housing to build and develop in the lower and middle markets that are often overlooked by developers building Assisted Living, Memory Care or Skilled Nursing facilities. With the baby boomer generation aging, it is estimated that about 14 million seniors will not be able to afford the current senior housing models. The need for low income senior housing options for seniors on fixed incomes is growing. Also, with many of these opportunity zones in urban areas, proximity to shopping, dining and public transportation are a valuable asset to seniors with limited transportation options. The stimulation of job growth due to new businesses in the area will likely spur development as well.

The JCH Group Can Help You Identify Opportunity Zones

How can JCH help? JCH has listed properties in opportunity zones and our inventory is constantly changing. Our 20-year track record of handling transactions in Assisted Living, Independent Living, Memory Care and Skilled Nursing, can help you navigate the acquisition, or re-investment process. Call JCH to ask about listings in these opportunity zones and how we can help.

For more information on Opportunity Zones visit https://www.irs.gov/newsroom/opportunity-zones-frequently-asked-questions or for a visual map of the census tracts designated as Qualified Opportunity Zones may also be found at Opportunity Zones Resources at https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx