Wolf&Grayson EditorialTax policy changes don’t usually generate excitement, but recent legislation has created some remarkable opportunities for real estate investors. The provisions around opportunity zones offer ways to defer the immediate capital gain and eliminate the capital gains generated by the opportunity zone investment. Lance Thrailkill, who works with 3D printing technology and real estate development, has been studying these changes closely. His analysis reveals strategies that could transform how investors approach long-term rental properties while helping underserved communities.
Exploring Key Differences in Opportunity Zones
Most investors know about 1031 exchanges, but Thrailkill points out the legislation made these permanent. “Section 1031 exchanges were made permanent, which allows you to take a capital gain and invest it in another property and defer the capital gains,” he explains. That’s helpful, but the real game-changer lies elsewhere. Opportunity zones target economically challenged areas, and there are actually two types. “There are opportunity zones and then there are rural opportunity zones,” he notes. What sets these apart from traditional exchanges is flexibility. With 1031 exchanges, you’re locked into real estate. But opportunity zones work differently. “You can sell stocks, and any capital gain that you had can be invested in an opportunity zone,” Thrailkill says. That opens doors for investors with gains from any asset class.
Here’s where things get interesting. When you invest capital gains into opportunity zones, you can defer paying taxes on your original capital gain for five years. But that’s just the beginning. Regular opportunity zones give you a 10% step-up in basis on your original capital gain when you owe the taxes after the five year deferral period has passed. Rural opportunity zones go much further. “In a rural opportunity zone, you get to step up your basis by 30%,” Thrailkill explains. So you’re not just delaying taxes, you are also reducing your taxes owed by 30% as a result of the step up basis.
Highlighting Long-Term Rewards for Investors
The biggest advantage comes to those who stick around. Hold your opportunity zone investment for ten years, and something remarkable happens. “If you maintain that investment in the opportunity zone or rural opportunity zone for 10 years, you will not owe any tax on investment B,” Thrailkill states. Investment B means whatever gains you make from the opportunity zone property itself. Think about it. You defer taxes on your original gains for five years, get a step-up that reduces those taxes by up to 30%, then pay no taxes on gains from your new investment if you hold it for a decade. For rental properties, which investors often keep long-term anyway, this timeline works naturally.
Implementing Opportunity Zones in Practice
Thrailkill and his partner have positioned themselves strategically. “We have 50 lots in a rural opportunity zone,” he says. Their 3D printing approach works particularly well in rural areas where they do not have to consider if a municipality has adopted the 3D printing methodology into their building code. “We don’t have to waste time with the municipality trying to figure out how to work 3D printing into their building code. Instead, we are able to move quickly with engineer stamped building plans and licensed trades.” This removes regulatory hurdles that might slow traditional construction. The rural opportunity zones become even more attractive because of both tax benefits and operational freedom. Not to mention, the 3D printed rental homes that PRINT3D Technologies has already built have proven to have lower building costs for superior structures that have lower maintenance costs than traditional construction, making this investment opportunity all the more attractive.
These incentives were designed to last. “You need long-term, sustained commitment of capital and building to really make an impact,” Thrailkill observes. “The fact that they made it permanent is very beneficial for these disadvantaged areas.” The permanence gives investors confidence to commit substantial resources without worrying about policy changes. The legislation pushes private money toward communities that need investment while offering compelling tax advantages. It’s structured to benefit both investors and economically challenged areas. The opportunity zone provisions represent a significant shift in how tax policy can drive private investment toward social good while creating wealth for investors willing to commit capital long-term.
Connect with Lance Thrailkill on LinkedIn if you are interested in investing into the rural opportunity zone lots that they have, or if you are interested in learning more about the benefits of 3D printed homes.
