Kukui’ula Kauai Update

Kula Makai was the 2019 summer blockbuster for Kukui’ula, with the arrival of IRS Opportunity Fund investors. Six newly-released ocean view Kula Makai homesites sold from $1,700,000 to $2,150,000 with the oceanside 40,729 sq ft Homesite L now under contract at $5,000,000.

Kula Makai Neighborhood

The gated Kula Makai neighborhood is the finest, la crème de la crème, of Kukui’ula because of its location along the western edge of the community, adjacent to the National Tropical Botanical Garden on the South Shore of Kauai.

Kula Makai features ready-to-build homesites priced from $1,750,000 for the 19,064 sqft Lot 3, to $10,500,000 for the 43,993 sqft Homesite N, with stunning views of the South Shore Kauai coastline.

Kula Makai is the community’s newest neighborhood with one home currently under construction.

Kahalawai Neighborhood

The Kahalawai Neighborhood features panoramic ocean, golf course, and orchard views.

Two Kahalawai homesites sold, at $750,000 this summer, and there are two homesites currently listed for sale: The 34,195 sq ft Homesite 1 at $1,300,000 and the 21,802 sq ft Homesite 23 at $1,450,000.

The 3,258 sq ft 4-bedroom 5-bath residence located on the 23,670 sqft Kahalawai Homesite 38 sold for $6,000,000 in August, and there are four residences currently for sale from $6,595,000 for the 3,559 sqft 5-bedroom 5.5-bath Homesite 22 residence, to $13,000,000 for the 5,516 sqft 5-bedroom 5.5-bath Homesite 50 residence.

Kaulu Neighborhood

The Kaulu Neighborhood is the established 85-homesite neighborhood where homeowners are permitted to offer their properties as 7-day vacation rental homes.

In the past three months, Kaulu welcomed Opportunity Fund investors, with eight homesites selling from $585,000 to $1,750,000. Kaulu Homesite 14 is currently under contract, and two Kaulu homesites are currently listed for sale from $749,000 to $895,000.

There are three Kaula residences listed for sale from $1,950,000 for the 1,698 sqft 2-bedroom 2-bath Homesite 85 residence, to $3,685,000 for the 3,229 sqft 4-bedroom 4.5 bath Homesite 8 residence.

Kaulu Neighborhood

Kukui’ula in IRS Designated Opportunity Zone Location

There are two certified Opportunity Zones on Kauai. One Opportunity Zone is located on the island’s South Shore and includes the entire Kukui’ula community.

The IRS Opportunity Zone program is designed to spur economic development by providing three tax incentives to taxpayers:

• First, a taxpayer may defer paying tax on any prior capital gains invested in a Qualified Opportunity Fund until the earlier of  1) the date the investment is sold or exchanged, or 2) December 31, 2026.
• Second, if the Opportunity Fund investment is held longer than 5 years, there is a 10% exclusion of the deferred gain. If held for more than 7 years, the exclusion is 15%.
• Third, if the taxpayer holds the investment in the Opportunity Fund for at least 10 years, the taxpayer is eligible for an increase in basis of the Opportunity Fund investment equal to its fair market value on the date that Opportunity Fund investment is sold or exchanged.

It will be interesting to follow the IRS publications as the department interprets 26 USC section 1400Z-2 applications developed by tax specialists. Please contact your tax specialist to determine how these new tax incentives may possibly work for you.

Looking for Opportunity Zone property on Kauai? Contact me — Lori Decker, Kauai Opportunity Zone specialist.