- Project proponents and local governments update projects over time
- Local governments generate standard and custom reports to understand which Opportunity Zones are attracting interest and investment
- Community socioeconomic information is tracked and reported over time in order to understand community outcomes from Opportunity Zone investments
About Opportunity Zones
What is the Opportunity Zone incentive and why was it created?
The Opportunity Zone program was established by the U.S. Congress in the Tax Cuts and Jobs Act signed into law in December, 2017. It was designed to encourage long-term investments in low-income communities across the United States by providing significant tax incentives to investors who reinvest their capital gains from stock, real estate or other assets into these zones.
What terms should I know?
Additional qualifications may apply for each of these terms, but to get started, it’s good to know the following key terms:
- Qualified Opportunity Zone (QOZ) – Low-income community selected by the Governors of every U.S. state and territory and certified by the U.S. Secretary of the Treasury.
- Qualified Opportunity Fund (QOF) – A corporation or partnership that is used as a vehicle to invest capital gains in an QOZ.
- Qualified Opportunity Zone Property – Includes stock, partnership interests and business property that is substantially located within a QOZ
- Qualified Opportunity Zone Business – A business in which substantially all of its owned or leased tangible property is located within a QOZ.
What are the benefits of investing in an Opportunity Zone?
ndividuals or entities who reinvest their capital gains into a Qualified Opportunity Zone Fund may receive:
- Temporary Deferral. Defer taxes on their original capital gains until December 31, 2026.
- Step-Up In Basis. If the Qualified Opportunity Fund (QOF) holds the investment for 5 years, they receive a 10% reduction on their original capital gains taxes. If the QOF holds the investment for another 2 years, they receive an additional 5% reduction on their original capital gains taxes. These capital gains taxes must be paid by December 31, 2026.
- Permanent Exclusion. If the QOF holds the investment for 10 or more years, they pay zero federal capital gains taxes on any appreciation of the investment.
How are investments made in an Opportunity Zone?
Investors must roll capital gains into a Qualified Opportunity Fund which then can make investments in the Qualified Opportunity Zone. Generally, investors have 180 days from the sale of an asset to roll their capital gains into a Qualified Opportunity Fund.
What can a QOF invest in?
A QOF can invest in almost any type of business, including commercial and industrial real estate, housing, or infrastructure, as well as in existing or start-up businesses.
OppZone Portal is a service provided by the team at Applied Analysis, an economic, fiscal and public policy consulting firm.