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V O L . X X V I I N O. I V F E B R UA R Y 2 2 , 2 0 2 1 18 W E A LT H M A N A G E M E N T / R E T I R E M E N T F O C U S "Taxes are often an important con- sideration for investors looking to sell property," Favreau says. "Without 1031 tax treatment, investors may continue holding a property instead." In recent years, the strong economy has meant a lot of exchanges, or at least the intention — with a 180-day window to make the exchange, investors some- times can't close the deal. Paszyc says the time constraint and limited supply mean "we are seeing many sellers who intended to perform an exchange not able to consummate the 'up leg' because a suitable exchange property is not available." Johnson agrees. "Sometimes it's hard to find a replacement," she says. at can result in a buyer scrambling to make what could possibly be a bad investment. "A bad investment is still a bad investment," Johnson says. "Don't let taxes drive your decision." When a deal can't be closed, the seller ends up paying the taxes. The Opportunity Zone factor Paszyc says some investors may turn to Opportunity Zones more if they can't use 1031s. He points out they're a way to defer taxes while also benefit- ing the greater good by pushing capi- tal into underinvested communities. e Opportunity Zone tax benefit that emerged from the 2017 tax plan is similar to 1031s in that it allows capital to be reinvested, but with restrictions that include reinvesting into a desig- nated Opportunity Zone and provid- ing jobs and economic gains from the reinvestment within a certain timeframe to eliminate tax payments. Boulos partnered with Coastal Enterprises Inc. in 2019 to form the CEI-Boulos Opportunity Fund, with a pilot amount of $22 million. It was recognized by Forbes as one of the top 20 Opportunity Zone fund catalysts in the U.S. e fund, Paszyc says, brings com- munity reinvestment to areas that severely need it, while helping inves- tors defer capital gains taxes. While the option works for a cer- tain type of investor, it's not an option for all, though. "Opportunity Zones offer similar tax benefits, but have very different features," Favreau says. ey're also "relatively new, more complicated, and limited as to the location of the investment." Johnson says many clients using 1031s fall in the $250,000 to $750,000 investment income range, and use the exchange as a key part of their business. "Once they've been using it for a while, it's not that difficult," she says. Such investors "are on the lookout, they're able to work their investments." M a u r e e n M i l l i k e n , M a i n e b i z s e n i o r w r i t e r , c a n b e r e a c h e d a t m m i l l i k e n @ m a i n e b i z . b i z Maine's credit unions are here for you. mainecreditunions.org Helping hard-working Mainers improve their financial futures. Maine credit unions are all about you, not profits. We build long-lasting personal and business relationships that focus on your unique needs; your dreams; your future. Get better rates, lower fees, and make your money work for you. Whatever your future looks like, we can help you get there. » C O N T I N U E D F RO M P R E V I O U S PA G E P H O T O / C O U R T E S Y O F V E R R I L L Cheryl Johnson, a tax attorney with Verrill, says 1031 exchanges encourage investors to keep investing

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