‘Tis the Season for Real Estate Investing

Posted on Dec 6 2019

With all of the shopping, parties, and celebrations, it's easy to lose sight of an important year-end opportunity: The best return on property investment in real estate, particularly homes, is often in December.

Over time, December has been one of the year's slowest months for home sales; however, a near perfect storm of several special circumstances make December 2019 an exceptional time to invest. These include:

  • Declining Interest Rates - As of Dec. 1, interest rates are a full percentage point lower than they were one year ago.
  • Slowing Interest - Data from the Mortgage Bankers Assoc. shows that mortgage applications for the last week of November 2019 fell by nearly ten percent. That's a trend that is likely to continue through December, making this a buyer's market.
  • Tax Benefits - While they are not particular to December 2019, the year-end real estate tax benefits of a property purchase are always enticing. The tax benefits of real estate investing by Dec. 31 include breaks for mortgage interest, loan points, and property taxes.
  • Motivated Sellers - For the same reasons you want to buy, others may want to sell. Some sellers have tax concerns that will help them benefit from unloading property or leveraging the sale for another investment.
  • Closer Looks - There is an old adage, "Never buy a car at night." For home-buying, it can be said that one should never buy a house in the summer. The fact is that a winter preview of a home or other property will give you a much more realistic idea of how the investment can weather the elements.
  • Opportunity Zone Deadline - Dec. 31 will be the last day to take advantage of certain Opportunity Zone tax benefits. By investing in a Qualified Opportunity Fund (QOF) before Jan. 1 and holding it for seven years, you will not pay tax on 15% of your deferred capital gains.

Qualified Opportunity Zones were created to boost growth in economically-distressed areas of the country by providing special tax benefits for investors.

With all of the year-end distractions, it may be difficult to make real estate investing a priority, but for those who do and particularly for those who invest in Qualified Opportunity Zones there may be extra gifts this year.