Kauai Opportunity Zones Update

Kauai IRS Opportunity Zone properties may have the best potential for tax-free appreciation over the next ten years, in the entire State of Hawaii.

Properties along beautiful Hanalei Bay are located in one of two Kauai IRS Opportunity Zones

Hanalei Properties

There are currently three beachfront properties listed for sale on the spectacular Hanalei Bay ranging from $4.500,000 for a 2-bedroom 2-bath cottage on a 6,010 sqft lot, to $15,500,000 for two homes on two adjacent lots totaling 32,644 sqft. The best Opportunity Zone property purchase may be the 5462 Weke Road property currently listed by Neal Norman, Hawaii Life at $8,250,000 for a 1,559 sqft 3-bedroom 3-bath Hawaiian plantation-style home on a 13,732 sqft beachfront lot (MLS 628471).

Properties along the spectacular Haena beaches are situated in Kauai IRS designated Opportunity Zone

Haena Properties

The sole Opportunity Zone property currently listed in Haena is the 4411 Oneone Road property at $5,900,000 for a 2,060 sqft 3-bedroom 3-bath home of a 15,350 sqft beachfront lot (MLS 630264).

Lawai Road oceanfront properties overlook South Shore Kauai iconic surf breaks in second Kauai Opportunity Zone

Poipu Properties

Oceanfront Lawai Road properties, overlooking South Shore Kauai iconic surf breaks with the upscale Kukui’ula resort community’s private golf course and Kauai mountains as their backdrop, are located in the second Kauai IRS designated Opportunity Zone.

There are currently eight oceanfront properties currently listed for sale along Lawai Road ranging from $3,500,000 for a 3-bedroom 3-bath home on an 11,105 sqft lot, to $4,500,000 for a 3,221 sqft 5-bedroom 5-bath  home on a 9,905 sqft lot, to $7,500,000 for a 2,341 sq ft 3-bedroom 2-bath home on a 12,381 sqft lot.

The best Opportunity Zone property purchase may be the 4842 Lawai Road property listed by Lori Decker, Hawaii Life, at $3,500,000 for a 1,988 sq ft 3-bedroom 3-bath Hawaiian plantation-style home on an 11,105 sq ft oceanfront lot (MLS 631700).

The IRS Opportunity Zone Substantial Improvement Rule

It is my understanding substantial improvement to the Opportunity Zone property during the 30 months after purchase, is required under the 2018 legislation. The dollar amount of the substantial improvement will be determined by placing a value to the land and a value to the building on the property.

One may easily reach the conclusion in certain cases, the value given to Kauai oceanfront land is the significant portion of the purchase price, based on historical real estate data. Therefore the required substantial improvement may be determined to be significantly lower with these special Opportunity Fund purchases. And, it is my understanding the Opportunity Zone rules will be applied on a case by case basis.

As always, check with your tax specialist.

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