One of the sleeper provisions in the 2017 Tax Reform bill is now picking up steam – the creation of Opportunity Zones (more info on Opportunity Zones below).
The new legislation, which we are going to refer to as the “OZ Program”, is intended to be a win-win both for low income communities in need of development dollars, as well as investors looking to minimize taxes on their capital gains. Notably, the OZ Program could be very useful for:
- Developers seeking investors for Opportunity Zone investments;
- Real estate and non-real estate players sitting on large capital gains from real estate, stocks,bonds, and pretty much any other asset (collectively, “Appreciated Assets”), that would like to transition to real estate investments without triggering taxes;
- Municipalities that have Opportunity Zones in them; and
- Any other party that has development, investment, lending or other business dealings that could take place in an Opportunity Zone.1
Before we get into the tax-savings issues, we note that Opportunity Zones are located in every state(nominated by the governor of each state and the mayor of the District of Columbia). Although not yet finalized, the Opportunity Zones that have already been approved can be seen on a map at this website:http://eig.org/opportunityzones.
One thing to be mindful of at the outset is the fact that the maximum tax benefits are available only if you jump on the Opportunity Zone train quickly.
To read the whole article please click: Opportunity Zone White Paper