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Opportunity Zones

Opportunity Zones

Since their introduction, Opportunity zones have developed interest at an extraordinary pace. The program has swiftly mobilized investors, advisers, developers, and communities excited by its potential to access a vast reservoir of untapped capital to help revitalize underserved neighborhoods. The program provides an outlet for investors with capital gains to unlock substantial tax inc.

Enacted as part of the 2017 Tax Cuts and Jobs Act, the Opportunity Zones program was established to encourage social advancement and private investment in economically distressed census tracts to aid job creation and new business formation. The program incentivizes investment by allowing for the deferral of capital gains (rollover gains), reducing tax obligations on a portion of those gains, and most notably, allowing Qualified Opportunity Zone (QOZ) investments to grow tax free.

Key points of the program:

  • More than 8,700 low-income census tracts have been designated by the treasury
  • Self-certification of Qualified Opportunity Funds (QOF)
  • Eligible capital gains can be from nearly any source
  • Eligible capital gain must be invested in QOF within 180 days
  • QOF must invest in QOZ property, which include both QOZ business property or interest in QOZ business
  • There is a 31-month safe harbor for working capital held by a QOZ business
  • Substantial improvements to non-original use QOZ business property within 3O months (improvements must exceed to cost of the property, excluding land)
  • QOF must have at least 90 percent of its assets in QOZ property (including interests in QOZ businesses)
  • At least seventy percent of the tangible property owned or leased by a QOZ business must qualify 

 

Learn more by downloading the pdf here below.

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