SSA Marketing Group

 

What is the GO Zone

The GO Zone, Gulf Opportunity Zone, (also called the "Core Disaster Area") covers a portion of the Hurricane Katrina Disaster Area determined by the Federal Emergency Management Agency to be eligible for individual and/or public assistance from the federal government.

 

Hurricane Rita Disaster Area covers the area for which the President declared a major disaster before Oct. 6, 2005, because of Hurricane Rita, which was the entire states of Louisiana and Texas. The Rita GO Zone covers the portion of the Hurricane Rita Disaster Area determined by FEMA to be eligible for either individual and/or public assistance from the federal government.

 

Hurricane Katrina Disaster Area covers the area for which the President declared a major disaster before Sept. 14, 2005. This includes the entire states of Alabama, Florida, Louisiana and Mississippi. A portion of the Hurricane Katrina Disaster Area has been designated by the Internal Revenue Service as a covered disaster area. The Katrina Covered Disaster Area covers all of the parishes in Louisiana, all of the counties in Mississippi and certain specified counties in Florida and Alabama.

 

Where is the GO Zone

In Louisiana, the GO Zone covers the following parishes: 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, Vermilion, Washington, West Baton Rouge and West Feliciana.

Mississippi counties that are included in the Zone for individual and public assistance are: Adams, Amite, Attala, Claiborne, Choctaw, 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. 

 Alabama Counties in the GO Zone: Tuscaloosa, Pickens, Sumter, Greene, Hale, Marengo, Choctaw, Clarke, Washington, Mobile and Baldwin counties.

Primary Benefits to Small Investors

Primarily, the 50% accelerated depreciation is providing the most benefit as it creates an extraordinary tax shelter for savvy investors.  This tax benefit can be applied to Net Operating Losses (NOL) for the year the property is constructed and carried back up to 5 years if the deduction exceeds the NOL.  Excess deductions may also be carried forward up to 20 years.  It is important to remember that this is only a tax deferment and the depreciation will be taxed as ordinary income, with the exception of certain designated areas, when the property is sold.  Conversely, the tax may be deferred indefinitely until the owner passes away, at which time it would fall into the estate tax category.  One may also consider a 1031 exchange.  A deadline of December 31^st, 2008 for real property (depreciation does not cover land costs) is in place and will be strictly adhered to when considering the 50% bonus depreciation. Tax exempt financing does exist in the form of $4.9 billion dollars in Industrial Revenue Bonds. These, however, would disqualify an investor from the tax depreciation.

If one considers the estimated $30,000 - $40,000 equity generated by the reduced sales prices the builders are offering, this creates a phenomenal opportunity for small investors.