Opportunity Zone Program Overview

Opportunity Zones were created by the Tax Cuts and Jobs Act of 2017 to incentivize long-term private investment in designated communities in need of capital investment. The policy provides substantial tax benefits to investors who invest a realized capital gain into an Opportunity Zone Fund.

Upon realizing a capital gain, investors have 180 days to invest their gain in an Opportunity Fund. By investing in Opportunity Zones through a Qualified Opportunity Fund, investors receive the following benefits:

Year 0

Capital gain is invested into an Opportunity Zone Fund

Deferral of capital gains tax liability until the earlier of investment exit or December 31, 2026

Year 7

15% Step-up in basis

If $100 of capital gains is invested, the investor will owe tax on $85

Year 10

Upon sale of the asset, the investor receives a step-up in basis to Fair Market Value so all post-investment appreciation is tax free after 10 years. If the $100 investment is now worth $200, the $100 of appreciation is not subject to capital gains taxation upon disposition

Investment Comparison

Resources


New York Times:
Tucked Into the Tax Bill, a Plan to Help Distressed America 

“WASHINGTON — A little-noticed section in the $1.5 trillion tax cut that President Trump signed into law late last month is drawing attention from venture capitalists, state government officials and mayors across America…”


IRS FAQ:
Opportunity Zones Frequently Asked Questions

“Q. What is an Opportunity Zone? A. An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation authority to the Internal Revenue Service…”


Economic Innovation Group:
A new national community investment program that connects private capital with low-income communities across America

“Opportunity Zones are a new community development program established by Congress in the Tax Cuts and Jobs Act of 2017 to encourage long-term investments in low-income urban and rural communities nationwide. The Opportunity Zones program provides a tax incentive for investors to re-invest their unrealized capital gains into Opportunity Funds that are dedicated to investing into Opportunity Zones designated by the chief executives of every U.S. state and territory…”


Greenberg Traurig:
Qualified Opportunity Zones and Tax Credit Incentives under the Tax Cuts and Jobs Act

“The new tax reform legislation, the Tax Cuts and Jobs Act (TCJA), created a significant new economic development tool alongside a meaningful tax deferral and abatement mechanism, “qualified opportunity zones.” The new provision provides a flexible deferral mechanism for short and long term capital gains for current investments in nearly all asset classes…”


Forbes:
Triple Play Tax Break: New Opportunity Zone Funds Cut Your Taxes Three Ways

“As part of the December 2017 Trump tax cut, an unlikely group of billionaires and politicians quietly inserted a generous and complicated new tax break designed to lure big dollars into struggling areas known as Opportunity Zones, or O-zones. About 8,700 O-zones nationwide, ranging from run-down inner cities to dusty rural hamlets, have already been designated…”


Forbes:
An Unlikely Group Of Billionaires And Politicians Has Created The Most Unbelievable Tax Break Ever

“Success Street in North Charleston, South Carolina, might be the most misnamed place in America, a path through a weedy, desolate neighborhood with 20% unemployment and a 40% poverty rate. Its biggest claim to fame strolls past the gritty brick apartment buildings and tumbledown bungalows on a muggy morning in late June: Timothy Scott, a local product who grew up to become the first black Republican U.S. senator in more than three decades…”