In my opinion, the requirement for the GO Zone property to be own by someone who is active in a trade or business creates an overall potential for investor benefit but contains two traps for the unwary.

Let’s go back to another section of 2006-77:

SECTION 3. SUBSTANTIALLY ALL AND ACTIVE CONDUCT REQUIREMENTS UNDER section 1400N(d)(2)(A)(ii)
.01 SUBSTANTIALLY ALL REQUIREMENT. Each depreciable property will meet the requirements of section 1400N(d)(2)(A)(ii) if substantially all of the use of the property is in the GO Zone and in the active conduct of a trade of business by the taxpayer in the GO Zone. For this purpose, the term “substantially all” means 80 percent or more during each taxable year. If greater than 20 percent of the use of the property either is outside the counties and parishes designated as being part of the GO Zone or is not in the active conduct of a trade or business by the taxpayer in the GO Zone, then the property is not GO Zone property and is not eligible for the GO Zone additional first year depreciation deduction.

I think there are two traps in this section.

First trap: The first, while a trap, is not that large for the typical real estate investor: The GO Zone property must be used more than 80% inside the GO Zone. This goes back to the discussion in Question 7 where the implied position of the legislation is to keep all of the benefits within the GO Zone.

The examples provided by the IRS relate mostly to a delivery truck which, although purchased by a business in the GO Zone, was not used within the GO Zone for more than 80% of its use. Due to a violation of the use requirement, the IRS disallowed the bonus depreciation.

It appears the typical real estate investor will only purchase portable property for direct use in the real estate and, therefore, it would almost always stay in place in the Go Zone. However, this 80% use factor is important to remember.

Second trap: The second trap is larger and more camouflaged. Consider the following example from Notice 2006-77. I know this is a long quote but it needs to be read and understood.

.02 ACTIVE CONDUCT OF A TRADE OR BUSINESS REQUIREMENT.

(1) TRADE OR BUSINESS DEFINITION. For purposes of section 1400N(d)(2)(A)(ii), the term “trade or business” has the same meaning as in section 162 and the regulations thereunder. Thus, property held merely for the production of income or used in an activity not engaged in for profit (as described in section 183) does not qualify for the GO Zone additional first year depreciation deduction.

(2) ACTIVE CONDUCT. Solely for purposes of section 1400N(d)(2)(A)(ii), the determination of whether a trade or business is actively conducted by the taxpayer is to be made based on all of the facts and circumstances. A taxpayer generally is considered to actively conduct a trade or business if the taxpayer meaningfully
participates in the management or operations of the trade or business. Furthermore, for purposes of section 1400N(d)(2)(A)(ii), a partner, member, or shareholder of a partnership, limited liability company, or S corporation, respectively, is considered to actively conduct a trade or business of the partnership, limited liability company, or S corporation if the partnership, limited liability company, or S corporation meaningfully participates (through the activities performed by itself, or by others on behalf of the
partnership, limited liability company, or S corporation, respectively) in the management or operations of the trade or business. Similar rules apply to other pass-thru entities such as trusts or estates.

(3) EXAMPLES. The following examples illustrate the provisions of section 3.02 of this notice.

(a) EXAMPLE 1. During 2006, MNO, a limited liability company, constructs and places in service a new apartment building in the GO Zone. MNO is treated as a partnership for federal tax purposes. B, a member in MNO, manages and operates this apartment building for MNO. Because B manages and operates the
apartment building for MNO, MNO meaningfully participates in the management and operations of the apartment building. Consequently, all of the use of the apartment building is in the GO Zone and in the active conduct of a trade or business by MNO in the GO Zone. Accordingly, the unadjusted depreciable basis
(as defined in section 1.168(b)-1T(a)(3)) of the apartment building qualifies for the GO Zone additional first year depreciation deduction (assuming all other requirements are met). However, limitation provisions of the Code (for example, section 469) apply and may limit the amount of the GO Zone additional first year depreciation deduction that may be claimed by the members of MNO.

(b) EXAMPLE 2. During 2006, C, an individual, places in service a new restaurant in the GO Zone and employs D to operate it. During 2006, C periodically met with D to review operations relating to the restaurant. C also approved the restaurant’s budget for 2006 that was prepared by D. D performs all the necessary operating functions, including hiring chefs, acquiring the necessary food and restaurant supplies, and writing the
checks to pay all bills and the chefs’ salaries. Based on these facts and circumstances, C meaningfully participates in the management of the restaurant. Consequently, all of the use of the restaurant is in the GO Zone and in the active conduct of a trade or business by C in the GO Zone. Accordingly, the
unadjusted depreciable basis of the restaurant qualifies for the GO Zone additional first year depreciation deduction (assuming all other requirements are met). However, limitation provisions of the Code (for example, section 469) apply and may limit the amount of the GO Zone additional first year depreciation
deduction that may be claimed by C.

(c) EXAMPLE 3. During 2006, PRS, a partnership, constructs and places in service a new small commercial building in the GO Zone and leases it to E, an unrelated party, who uses the building as a fast food restaurant. This building is the only property owned by PRS. The lease agreement between PRS and E is
a triple net lease under which E is responsible for all of the costs relating to the building (for example, paying all taxes, insurance, and maintenance expenses) in addition to paying rent. Because of the triple net lease, PRS does not meaningfully participate in the management or operations of the building and the building is not used in the active conduct of a trade or business by PRS in the GO Zone. Accordingly, the building does not qualify for the GO Zone additional first year depreciation deduction.

(d) EXAMPLE 4. Same facts as Example 3, except that PRS, during 2006, constructs and places in service two other new commercial buildings in the GO Zone and leases these buildings to F, an unrelated party, who uses the two other buildings as office space. The lease agreement between PRS and F is not a triple net lease. G, a partner in PRS, manages and operates the two office buildings for PRS. Because G manages and operates the two office buildings for PRS, PRS meaningfully participates in the management and operations of the two office buildings. Consequently, these two office buildings are used in the active conduct of a trade or business by PRS in the GO Zone. Accordingly, the total unadjusted depreciable basis of the two office buildings leased to F qualifies for the GO Zone additional first year depreciation deduction (assuming all other requirements are met). However, limitation provisions of the Code (for example, section 469) apply and may limit the amount of the GO Zone additional first year depreciation deduction that may be claimed by the partners of PRS with respect to the two buildings leased to F. Further, because the requirements of section 1400N(d)(2)(A)(ii) apply on a property-by-property basis, the building leased to E does not qualify for the GO Zone additional first year depreciation deduction, as provided in Example 3.

What is going on here?

The tax code sometimes defines words differently than we define them for common usage. The entire discussion about active is an example. The code is trying to find a balance between the functions of an investor (mostly passive such as accounting for the investment) and an active role in the investment (such as managing and operating business aspects of the investment). Admittedly, this is a very hard balance to always maintain.

Why does the IRS try and form these definitions? Because the tax benefits for a passive owner are materially weaker than for an active owner. You can really see that difference was you explore the classification matrix between passive and active in the legislations. In the above examples, to simply OWN a building in the GO Zone does not automatically qualify it for GO Zone tax advantages. Some ideas which can be drawn from the above using a building rented to a third party as the example:

1. For a building to qualify as GO Zone-allowable property for the owner, the owner must have a minimum level of involvement in the building.
2. A triple-net lease evidentially causes some problems for the IRS as noted in the above examples. Therefore, I would be very careful in using such a lease for a GO Zone located property.
3. Business entity structure is critical here as is the underlying lease between the owner and the tenant.
4. Even with the same ownership, an owner can find that one building qualifies for GO Zone treatment and another does not so qualify.

Bottom line?

Economic and legal structure is very important here. I would strongly advise that all legal documents (including leases) be reviewed by a component legal advisor to ensure they are in compliance with the GO Zone rules and regulations.

My opinion?

Many taxpayers will be caught in this trap and think just because they have ownership in an otherwise qualifying GO Zone property, that ownership will qualify them for GO Zone tax treatment. They will be very disappointed when they discover they lost their hoped for tax benefits because they did not structure themselves or the investment appropriately.

My answer to this question…No!

In December of 2007, there were positions offered in tax literature that stated an IRC 1031-exchange form a GO Zone property to a non-GO Zone property would be allowed.

In my opinion, this position was (at best) aggressive.

In December of 2007, my advice to clients was as follows:
• At this time, I would base my economic decisions as if such an exchange would
not be allowed.

• At this time, I would restrict my planning use of IRC 1031-type exchanges between GO Zone properties which is still a rather large base of properties.

• If the IRS changes it general position from its current non-use to allowing GO Zone to non-GO Zone exchanges, a wise economic decision is only heightened.

• If the IRS changes its position, an option was only opened to you, no options were closed.

• If you are participating in a loan-forgiveness program, you need to hold the property for an extended period of time (usually 5 years) and so this issue has some time to play-out.

The tax world can move from development of appropriate tax planning tools to the development of very aggressive schemes to suit specific requests from their clients. The client wants a specific answer and the tax professional will substitute sound professional judgment and assistance to the client to provide such an answer no matter its aggression or risk level and no appropriate concern about its chance of support.

The result of that development are very aggressive programs based on an interplay of the following ideas: (A) Tax laws will change in the future and the client might be a beneficiary of that change, (B) The taxpayer’s return will never be audited on that issue, (C) If audited, the tax professional will somehow be able to win/settle the issue favorably for the client and (D) The tax professional’s opinion is so housed with disclaimers that they are protected from the effects of their aggressive advice.

I think the entire discussion on the use of IRC 1031-type exchanges from GO Zone to non-GO Zone properties is driven by a need for the very aggressive answers demanded by the client rather than providing the client sound tax advice.

In December of 2007, I called the appropriate department at the IRS and requested to speak to the individual which prepared the latest authoritative pronouncement on this question. The individual’s response was as follows:
• The IRS is aware of the debate regarding the use of a Section 1031-exchange from a GO Zone property to a non-GO Zone property.
• The IRS believes a key premise to the GO Zone legislation is the keeping of the GO Zone tax benefits within the GO Zone.
• The IRS is, at the current time, drafting a direct response to this GO Zone to non-GO Zone issue.
• The IRS will not provide any hints of their position on this issue at this time but did reaffirm their position that GO Zone benefits should stay in the GO Zone.
• The IRS appears to be giving tacit approval to the use of IRC 1031-type exchanges where two GO Zone properties are involved.
• There is not a public release date for the release of their position.

The safest tax answer at the present time is if you use an IRC 1031 exchange from a GO Zone status property to a non-GO Zone status property before the end of the depreciation period (use 27.5 years as a good guidance), you should plan on the need to recapture the bonus depreciation as ordinary income at the time of the exchange.

Those who think the answer is to recapture the bonus depreciation as ordinary income first pointed to Section 6 of Notice 2006-67 which is partially reproduced below:

If GO Zone property is no longer GO Zone property in the hands of the same tax payer at any time before the end of the GO Zone property’s recovery period…the tax payer must recapture in the taxable year in which… (it) is no longer GO Zone property the benefit derived from claiming the GO Zone additional first year depreciation…

Notice 2006-67 was replaced by Notice 2006-77 but, in my opinion, the fundamental position of Notice 2006-67 was affirmed.

Notice 2006-77 contains the following language which is very reminiscent of the superseded Notice:

SECTION 6. RECAPTURE RULES UNDER SECTION 1400N(d)(5)

.01 IN GENERAL. Section 1400N(d)(5) provides that for purposes of section 1400N(d), rules similar to the recapture rules under section 179(d)(10) and section 1.179-1(e) apply with respect to any GO Zone
property that ceases to be GO Zone property.

.02 APPLICATION. If GO Zone property is no longer GO Zone property in the hands of the same taxpayer at any time before the end of the GO Zone property’s recovery period as determined under section 167(f)(1) or section 168, as applicable, then the taxpayer must recapture in the taxable year in which the GO Zone property is no longer GO Zone property (the recapture year) the benefit derived from claiming the GO Zone additional first year depreciation deduction for such property. The benefit derived from claiming the GO Zone additional first year depreciation deduction for the property is equal to the excess of the total
depreciation claimed (including the GO Zone additional first year depreciation deduction) for the property for the taxable years before the recapture year over the total depreciation that would have been allowable for the taxable years before the recapture year as a deduction under section 167(f)(1) or section 168, as
applicable, had the GO Zone additional first year depreciation deduction not been claimed (regardless of whether such excess reduced the taxpayer’s tax liability).

Therefore, if I wanted to be beneficial for my clients, I would say IRC 1031-type exchanges appear to result in the recapture of the bonus depreciation when the exchange involves a GO Zone property to a non-GO Zone property.

There was an implied intent of the legislation to keep all of the tax benefits within the GO Zone due to their nature and benefit to the taxpayer. However, that intent is contrary to other parts of the legislation which implied an acknowledged for the need of capital outside of the GO Zone.

On 12 February 2008, the IRS issued Notice 2008-25 that solidified their position: An IRC 1031-exchange between a Go Zone property to a non-Go Zone property cannot occur without a recapture of bonus depreciation. In my mind, this is the practical settlement of the issue.

Why did I include so much background material on this issue?

Because I do not think it will go away and I think taxpayer-owners of GO Zone property are going to be approached with dubious tax schemes to try and avoid the recapture of the bonus depreciation.

Please stay tuned as additional information in this issue unfolds.

The appropriate use of IRC 1031-type exchanges is a legitimate tax concern as it can materially effect the economics of (1) Developing a portfolio of real estate investments via the deferral of gain and (2) Exiting from real estate investments to a cash position at a future point.

IRC 1031-type exchanges have been a strong tax tool over an extended period of time and it is only logical taxpayers would not like to see it’s use limited to specific geographical areas or the deferral benefits of gain restricted to only a portion of the total gain.

However, this is exactly the position the legislations seem to take and certainly the position which governs most of the IRS’s direction.

In December of 2007, I called the appropriate department at the IRS and requested to speak to the individual which prepared the latest authoritative pronouncement on this question. The individual’s response was as follows:
• The IRS is aware of the debate regarding the use of a Section 1031-exchange from a GO Zone property to a non-GO Zone property.
• The IRS believes a key premise to the GO Zone legislation is the keeping of the GO Zone tax benefits within the GO Zone.
• The IRS is, at the current time, drafting a direct response to this GO Zone to non- GO Zone issue.
• The IRS will not provide any hints of their position on this issue at this time but did reaffirm their position that GO Zone benefits should stay in the GO Zone.
• The IRS appears to be giving tacit approval to the use of IRC 1031-type exchanges where two GO Zone properties are involved.
• There is not a public release date for the release of their position.
• The safest tax answer as of December of 2007 is if you use an IRC 1031 exchange from a GO Zone status property to a GO Zone status property before the end of the depreciation period (use 27.5 years as a good guidance), you will not need to recapture the bonus depreciation as ordinary income at the time of the exchange.

My personal opinion based on the authoritative literature at this time?
An IRC 1031 exchange between GO Zone properties will not result in recapture of the bonus depreciation.

(Please note that this article does not imply an IRC Section 1031-type exchange with some limits cannot occur. The tax issue is whether the GO Zone bonus depreciation will need to be recaptured as ordinary income at the time of the exchange. Note also that this question deals with a current owner of a GO Zone property desiring to perform an IRC 1031-exchange to another property. This question does not discuss the issue of a 1031-exchange from a non-GO Zone property into a GO Zone property.)

1. Additional first-year bonus depreciation of 50% (fifty percent).

2. Increase in expensing of machinery, equipment and (in some cases) software bought
for use in a business from $105,000 to $205,000 and raised the phase-out level from
$420,000 to $1,020,000

3. Extension of net operating loss carryback to 5 years for losses attributable to the
bonus depreciation.

4. Partial expensing for demolition and cleanup costs to 50% of the capitalized costs.

5. Increase in rehabilitation credit from 10% to 13% and for historical buildings from
20% to 23%.

6. No alternative minimum tax (AMT) for bonus depreciation allowed expenses.

7. Some potential relief for forgiveness of debt.

These benefits were granted based on two levels of qualifications. The first level of qualification was the property itself. The legislations created a classification commonly called Go Zone property. To receive the tax benefits granted under the legislations, the property needed to achieve this classification.
The second level of qualification was the owner of the property. Assuming the property was classified Go Zone, then the underlying ownership needed also to be qualified to enjoy the tax benefits granted.
This two-tier qualification system was created apparently to focus and retain the benefits on certain geographical areas, to focus private investment towards certain types of real estate uses and to focus the tax benefits on a narrowly defined group of owners.

Approximately $6.5 million has been approved and closings have started. This money is going to help build close to 200 new construction homes (being bought by GO Zone investors). Please keep in mind that this area of the Mississippi GO Zone lost the majority of it’s housing stock in the hurricane and if you consider all the new jobs coming the area it’s going to still be short of the necessary housing.

Gary Swoope of the MDA has been quoted as saying that he thinks the program will proceed rapidly now which is obviously great news for GO Zone Gateway clients that have put their selves in position for the next round. (If you haven’t it’s not too late)

The Small Rental Assistance Program (SRAP) was established to provide forgivable loans for property that was renovated due to storm damage and the construction of new construction homes in a few select counties in the ravaged part of the Mississippi GO Zone. A total of $262 million has been alloted to the MDA to fund this program. The goal is to build approximately 7,000 GO Zone qualified rental properties in the Mississippi lower coastal counties.

The SRAP is essentially a 5 year program in the form a forgivable loan. In addition to the incredible tax incentives being offered the the federal government, the GO Zone Gateway investor can also apply for the SRAP program and receive up to $40k per unit ($80k per duplex) if they sign an agreement with the MDA agreeing to follow the program’s guidelines.

We have helped many investors get qualified for the 1st round and we are working very closely with the MDA. If you have questions on this program feel free to call us.

1. Private or commercial golf course

2. Country Club

3. Massage Parlor

4. Hot tub facility

5. Suntan facility

6. Property where the principal sale is alcoholic beverages for consumption off premises

7. Property used directly for gambling

8. Property used for animal racing or the on-site viewing of such racing

These are specific exclusions in GO Zone legislation as legislators did not think this type of operation is worthy of GO Zone benefits. But, at times, some of these uses are housed in buildings which would otherwise qualify for GO Zone treatment. The legislation therefore, carved-out some exceptions predominately based on the argument that if the excluded activities were a minor source of income, then the major use of the building would be judged against the criteria for GO Zone treatment. These exceptions needed to be handled on a case-by-case basis.

Tax benefits are granted from governmental taxing authorities so as to direct private enterprise activity towards a desired direction. In the case of real estate investing in the GO Zone, taxing authorities wanted to stimulate investment activity predominately through the granting of early recognition of GO Zone depreciation and providing a barrier for that early recognition from the effects of the alternative minimum tax (AMT). Other benefits were also granted.

As normal, it was anticipated by the Legislatures that the Treasury Department would develop the rules and regulations needed to implement the legislation. This has yet to be completely done. The current result is the rules and regulations are not totally fixed in regard to each and every question or situation that might arise.

The following is a sample of a letter I could have sent to clients in 2005 alerting them to most of the federal tax benefits of the GO Zone legislation:

Sample GO Zone Benefits Client Letter:

There were two tax law changes last year relating to Hurricane Katrina that may affect your 2005 tax return or provide opportunities for your tax returns for 2005, 2006, 2007, 2008, 2009 and 2010. The Katrina Emergency Tax Relief Act of 2005 (KETRA) and the Gulf Opportunity Zone Act of 2005 (GO Zone Act) provide tax relief to individuals and businesses affected by Hurricane Katrina’s devastation. Among other items, the Act:

(1) extend the deadline for filing eligible tax returns and making certain payments for income, gift, employment, estate and gift, and excise taxes to February 28, 2006;

(2) allow eligible individuals to withdraw up to $100,000 from their IRAs or pensions without incurring a 10 percent penalty, and allow those individuals to spread income subject to tax from these withdrawals over three years;

(3) increase the limit on loans from pension plans from $50,000 to $100,000;

(4) allow 401(k), 403(b), or IRA distributions used to purchase a home in the hurricane disaster area to be recontributed in certain circumstances;

(5) extend the Work Opportunity Tax Credit to Hurricane Katrina Employees. This group is comprised of individuals who, before the hurricane, resided in an area that is now eligible for major disaster area assistance;

(6) provide an employee retention tax credit for small businesses located in the disaster area that retains eligible employees on their payrolls;

(7) for charitable donations, provide an election for individuals to lift the 50 percent adjusted gross income limit and phase-out rule for cash donations to any charity and, for corporations, to waive the 10 percent income limitation for hurricane relief-related cash donations made from August 28, 2005, until the end of 2005;

(8) waive the tax on certain forgiveness of debt related to Hurricane Katrina for individuals who lived in the hurricane disaster area;

(9) under the involuntary conversion rules, increase the time that owners have to replace business property in the disaster area that was damaged in the hurricane from two years to five years, and increase the time to replace a principal residences from four years to five years;

(10) provide an additional first-year depreciation deduction equal to 50 percent of the adjusted basis of eligible property;

(11) extend the bonus depreciation deduction for property that had to be placed in service by December 31, 2005, to later dates on a case-by-case basis;

(12) increase the amount of business property that may be expensed under Code Section 179;

(13) expand the Hope scholarship and lifetime learning credit for students attending eligible institutions in the affected area;

(14) allow a deduction for certain demolition and clean-up costs;

(15) increase the NOL carryback period; and

(16) provide a temporary income exclusion for certain employer-provided housing.

Also, in tax years 2005 or 2006, a taxpayer may claim an additional exemption of up to $2,000, for housing a Hurricane Katrina displaced individual. The housing must be provided free of charge.

As a resident of the GO Zones and given the many possibilities for tax relief available for these tax years, it is important we discuss the impact of these and other tax issues.

The GO Zone legislation can also provide material tax benefits for qualifying investors in the GO Zone. There are many benefits for qualifying GO Zone investors. Please contact our office if you would like to discuss the tax effects of potential investment in the GO Zone.

For the purposes of this tax summary, we will only discuss those aspects which relate to real estate investment.

The Katrina GO Zone covers the following:

Alabama GO Zone: The counties of Baldwin, Choctaw, Clarke, Greene, Hale, Marengo, Mobile, Pickens, Sumter, Tuscaloosa, and Washington.

Louisiana GO Zone: The parishes of Acadia, Ascension, Assumption, Calcasieu, Cameron, East Baton Rouge, East Feliciana, Iberia, Iberville, Jefferson, Jefferson Davis, Lafayette, Lafourche, Livingston, Orleans, Plaquemines, Pointe Coupee, St. Bernard, St. Charles, St. Helena, St. James, St. John the Baptist, St. Martin, St. Mary, St. Tammany, Tangipahoa, Terrebonne, Vermillion, Washington, West Baton Rouge, and West Feliciana.

Mississippi GO Zone: The counties of Adams, Amite, Attala, Choctaw, Claiborne, Clarke, Copiah, Covington, Forrest, Franklin, George, Greene, Hancock, Harrison, Hinds, Holmes, Humphreys, Jackson, Jasper, Jefferson, Jefferson Davis, Jones, Kemper, Lamar, Lauderdale, Lawrence, Leake, Lincoln, Lowndes, Madison, Marion, Neshoba, Newton, Noxubee, Oktibbeha, Pearl River, Perry, Pike, Rankin, Scott, Simpson, Smith, Stone, Walthall, Warren, Wayne, Wilkinson, Winston, and Yazoo.

For instance, if you buy a property classified under the GO Zone, and hold it in an LLC, then you will most likely be required to file in Mississippi for that LLC. This will also be true even if you hold the property as an individual, and not as an LLC. Also, any property-related income or loss that is reported by the LLC on Federal Form 1065K-1 will be mirrored on a federal form as well as your resident state form. While you will find an offset on the returns filed in your state of residency for taxes paid to other states, you will still need to file your returns and pay taxes.

Therefore, it is important that when you assess the tax implications of your GO Zone investment, you take into consideration not only federal tax laws, but also the tax rules applicable in your state of residency, as well as the state of Mississippi. Only when you include all these factors in your estimate, can you gain a comprehensive all-inclusive picture of your applicable tax situation.

No matter what the real estate investment, timing is absolutely crucial. The highest profits are made when properties are purchased right at the beginning of growth. Right now, the Biloxi and Vancleave areas offer the most attractive investment opportunity in the entire GO Zone investment region.

There are a number of factors that make Biloxi and Vancleave so attractive to the investor looking to purchase a slice of the GO Zone pie.

In any real estate boom, the rates of migration into the region are a deciding factor. These rates today are the highest in Biloxi. New laws that allow casinos to be built on land, as opposed to being restricted to barges in the past have spurred casino development. With old casinos reporting record revenues and new casinos in the pipeline, this area is poised to become the second gaming capital of the country.

Although casino development plays a large part in the growth of Biloxi and Gulfport, they are not the only factors that are spearheading growth. There is the NASA Stennis Space Center which cushioned what could have been a catastrophic job loss after Katrina.

This increase in migration means an increase in job opportunities, and the job market in this region is exciting. The casinos themselves are believed to need at least 20,000 more workers in the near future.

The GO Zone investment incentives offered by the federal government are most attractive in Hancock County, Harrison County and Jackson County. These 3 counties experienced the maximum devastation during Katrina.

The rental situation in this region is chaotic, because of the lack of affordable high quality housing near the casinos. Employees are being trucked into work on hour long drives. Those who rent are forced to stay in trailers provided by FEMA. The situation is only expected to be aggravated by the sub prime crisis. This lack of housing is the reason why the GO Zone tax incentives have been offered by the government.

A sizzling job market, high rate of migration and the GO Zone incentives are the pillars supporting property appreciation in this region. Appreciation is, in fact, expected to be over 50% over the next 5 years. With Biloxi and Gulfport having the potential to become the south’s answer to Las Vegas in the coming years, and the close distance to New Orleans, it is highly likely that a new megapolis will rise in the future, making this area the ideal place for investment opportunities.

]]> http://www.gozonegateway.com/articles/go-zone-real-estate-investment-2/feed/