Paul L. Caron
Dean


Thursday, June 13, 2019

Opportunity Zone Designation Increases Commercial Property Prices By 14%-20%, Captured By Existing Owners

Alan Sage (MIT),  Mike Langen (Maastricht University) & Alex Van de Minne (MIT), Where Is the Opportunity in Opportunity Zones? Early Indicators of the Opportunity Zone Program’s Impact on Commercial Property Prices:

In December 2017, the U.S. Congress passed into law the Opportunity Zone (OZ) program, offering significant tax benefits for property investments in designated low-income census tracts. As investors effectively gain from higher income, opportunity zones should affect property prices. In this study, we compare transaction prices of properties located in designated and eligible OZ census tracts, using a structural time series approach to estimate a hierarchical repeat sales price index.

OZ1

We find that OZ designation did not impact all properties prices, but resulted in a 14% price increase for "redevelopment" properties and a 20% price increase for vacant development sites.

We do not find an expectation effect prior to designation. Our findings suggest that the OZ program has thus far primarily passed through the statutory tax benefits to existing land owners, with limited evidence of additional value creation.

https://taxprof.typepad.com/taxprof_blog/2019/06/opportunity-zone-designation-increases-commercial-property-prices-by-14-20-captured-by-existing-owne.html

Scholarship, Tax | Permalink

Comments