President Trump’s 2017 tax overhaul, the so-called “Tax Cuts and Jobs Act,” has created an exciting, potentially transformative incentive for real estate developers and investors. In addition to cutting taxes, the new law created large tax benefits for qualified investments in economically distressed areas of the country, called “Opportunity Zones.”
The brand new Opportunity Zones program was designed to encourage long term investment, redevelopment, and job creation in low income neighborhoods. In June of 2018, the Federal government released the final list of qualified Opportunity Zones. The IRS is expected to release additional guidance on how exactly the program benefits will be administered in the coming months.
But, what we know so far is the program provides three primary tax incentives for patient investing in low-income communities. Investors/Owners in “Qualified Opportunity Funds” (specific purpose legal entities) that develop property in Opportunity Zones will be eligible for: (1) deferral of tax on capital gains reinvested in an Opportunity Fund, (2) a 10-15% step up in basis on capital gains reinvested in an Opportunity Fund for 5 to 7 years, and (3) even a permanent exclusion of capital gains tax on an investment if held for at least 10 years.
Here are two links to information regarding the Opportunity Zone program and interactive maps of “Opportunity Zones.” I was surprised to see how many South Florida neighborhoods made it on the latest official list.
https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx
https://eig.org/wp-content/uploads/2018/02/Opportunity-Zones-Fact-Sheet.pdf
Matthew Scott is a Zoning Attorney in South Florida. With many years of experience, Matthew has acquired experience and expertise in land use and zoning laws. Matthew is passionate about zoning laws because it requires strategic thinking, creativity, and community engagement. Matthew enjoys working with a diverse community of professionals and improving the communities in which we live. For any further questions feel free to reach out to Matthew Scott.