Gulf Opportunity Zone (GO Zone)
Gulf Opportunity Zone (GO Zone) The Federal Emergency Management Agency (FEMA) established the Hurricane Katrina Disaster Area, which is partially covered by the GO Zone.
The unprecedented opportunity to take a 50% accelerated first year depreciation, existing for investors through 2008. You can possibly eliminate your income tax by acquiring rental properties in certain areas of Alabama. Newly constructed and proposed construction rental properties are available that qualify for this limited time deduction. The property must be placed in service by December 31, 2008 for real property, so time is of the essence.The Gulf Opportunity Zone Act 0f 2005 was created after Hurricane Katrina devastated many Gulf Coast areas. Thousands needed homes, prompting the government to create the “GO Zone” to promote construction of rental properties in areas that people who had been displaced could relocate to. This creates a way to make a profitable investment while helping provide the people this bill was passed to help with the homes in the area they are in need of.An investor purchasing a newly constructed property, and being first to rent the property, can take the accelerated 50% depreciation. This is in addition to normal depreciation for the remainder of such costs. The significant acceleration of the typical depreciation by allowing the bonus deduction in the first year of the properties service makes foe a spectacular investment property. Take the time now to invest and make money with this limited time opportunity.
The most significant financial incentives of the Gulf Opportunity Zone Act include:
• 50 percent bonus depreciation.
• 5-year NOL carry-back.
• Tax-exempt financing — $4.9 billion of “GO Zone Bonds” allotted.
• 100 percent deduction for qualifying tangible personal property for small businesses.
• Demolition and cleanup expenses may be expensed.
• Special incentives for employers.
• Employee Retention Tax Credit.
• Work Opportunity Tax Credits (WOTC).
• Combination of bond financing with other state incentives.
Please talk to your CPA to make sure you meet the requirements.