Targeted Growth Through Collaboration
Stimulating growth in economically-disadvantaged communities is a provocative aspiration — one that requires collaboration and support from the foremost experts in community development.
The Federal Opportunity Zones Program is an innovative reinvestment system established through the Tax Cuts and Jobs Act of 2017. Through temporarily deferring taxes on capital gains reinvested into designated Opportunity Funds, researchers estimate that the program may infuse rural and underserved markets with an estimated 6.1 trillion dollars.
Opportunity Zones were drawn from low-income census tracts with poverty rates of at least 20 percent and median family incomes of no greater than 80 percent of the area median income.
The governor of each state nominated up to a quarter of their low-income census tracts to be certified by the U.S. Department of the Treasury as Opportunity Zones.
Additionally, governors were given dispensation to nominate up to five percent of moderate-income tracts that are adjacent to qualifying low-income tracts to be designated as Opportunity Zones.
Opportunity Funds invest at least 90 percent of their capital in qualifying assets in Opportunity Zones. Investors who reinvest their realized capital gains into qualified Opportunity Funds receive the following benefits:
- A temporary tax deferral;
- A permanent exclusion from taxable income of capital gains from the sale or exchange of gains accrued from an investment in an Opportunity Fund; and
- A step-up in basis for capital gains, such that the basis of the original investment is increased by 10 percent if the investment in the opportunity zone fund is held for at least five years, and by an additional five percent if held for at least seven years. Therefore, those with assets invested for at least seven years will have 15 percent of their original gain excluded from taxation.
Real Estate
Opportunity Funds can invest in real estate projects, provided they build new construction or “significantly improve” existing structures.
Businesses
Opportunity Funds can also invest in businesses that perform the majority of their operating activities in Opportunity Zones.
Business Owners and Developers
Local employers have a new source of equity capital to access when looking to fund projects or expansions.
Investors with Capital Gains
Individuals and corporations benefit from deferring and reducing their capital gains tax liability.
If you would like more information call or text me today.
435-602-8228
