Federal Opportunity Zone Boosts Local Sale for Simonton Ranch Land Holding

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Simonton Ranch Land Holding LLC makes a deal on 172-acre, 55-plus community near iconic Sedona.

Robert Witt, Manger of Simonton Ranch Land Holding Company

The real estate principle of ‘Location, Location, Location’ is illustrated in spades and Opportunity Zone benefits could create the greatest opportunity for a preferred tax treatment in my lifetime.

Simonton Ranch Land Holding LLC has agreed to sell a 172-acre property next to a new park fronting the Verde River. The project is near Sedona and is expected to have many attractive features for future residents. “The fundamentals of the project are strong,” said Robert Witt, Manger of Simonton Ranch Land Holding Company. “But the really exciting part of the sale is the Opportunity Zone status of the property. Opportunity Zone tax treatment is like a 1031 exchange on steroids.”

The buyer is deferring capital gains from projects sold in 2018 until 2026. The deferral includes both the cost of the property and the cost to develop the property. The first year benefit to the buyer calculating the tax saving is estimated to be $2,119,220.00 due entirely to the opportunity zone status of the property.

“The real estate principle of ‘Location, Location, Location’ is illustrated in spades and Opportunity Zone benefits could create the greatest opportunity for a preferred tax treatment in my lifetime,” noted Witt. “In addition, the buyer receives sheltered cash flows. In this case the amenity-rich development will provide cash flows that are sheltered by the depreciation.”

The tax sheltered cash flows will be maintained until 2028, when the buyer can sell the property with no capital gain. Normally, the buyer would have to recapture the sheltered cash flow at the time of sale as part of a gain; however, inside of a Federal Opportunity Zone, there is no capital gain for Federal tax purposes as long as the buyer qualifies.

The property, located in a mountain valley with the Verde River flowing year-round and scheduled to close on November 15, 2018. Developing property in Opportunity Zones requires taking existing resources that are not being utilized and determining what the highest and best use is. To obtain the preferred tax treatment, investors must improve the property within 36 month of purchase.

“Thousand of Baby Boomers are retiring and moving to Arizona, and are looking for communities that offer a lifestyle they have worked hard to earn,” concluded Witt. “This includes a climate that is moderate, a clean environment close to nature and amenities like clubhouses, gardens, pools and spas, like this one will have.”

About Robert Witt, Simonton Ranch Land Holding LLC
Robert Witt is the president of the Beaver Creek Villas Condominium Association and managing partner for Simonton Ranch Land Holding LLC. For more information, please call (928) 202-1000. Simonton Ranch Land Holding is located at 400 W Finnie Flat Road, Suite 1C, Camp Verde, AZ.

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