Opportunity Zone Advisors

Hidden within the Tax Cuts and Jobs Act of 2017 there is a significant boon in the U.S. federal tax law. A statute within the law enables investors facing capital gains liabilities to invest in Qualified Opportunity Zones (IRS Sections 1400Z-1 and 1400Z-2) and thereby receive favorable tax treatment. The program is the result of the bipartisan Investing in Opportunity Act.

Investors who wish to defer, reduce and or ultimately be exempt from further capital gains tax consequences can invest (exchange) their gain into a Qualified Opportunity Fund (QOF). In turn, that fund will be used to make equity investments into business and or real estate located within Qualified Opportunity Zones (QOZ).

Within each state, local governments have worked together with the U.S. Treasury Department to identify underserved communities through the certified census tracts. To qualify, each tract must have an individual poverty rate of 20% or a median family income up to 80% of the tract median. With the goal of strengthening “zoned” communities and neighborhoods, the program encourages investment in both rural and urban, low-income areas in an effort to drive growth and job creation.

A Qualified Opportunity Fund is an investment vehicle organized as a corporation or partnership. The Fund utilizes an investor’s capital gain from a prior investment, with the specific purpose of investing in Qualified Opportunity Zone assets. A fund must hold at least 90 percent of its assets in qualifying Opportunity Zones. Read More...

Currently the statute does not preclude projects/investments in Qualified Opportunity Zones from additionally qualifying for and benefiting from other economic incentive programs. The flexibility of the OZ program could potentially work in combination with tax programs such as the Low-Income Housing Tax Credit (LIHTC), New Market Tax Credit (NMTC), historic rehabilitation tax credits and possibly more.  By pairing OZ projects with other community development incentives an OZ projects capital stack will be greatly improved, and significantly increase the probability for positive results.