Opportunity Zones Created to Incentivize Investments in Low Income Communities
Author: Michael Eagan
The Tax Cuts and Jobs Act (TCJA) added new Code sections 1400Z-1 and -2 to incentivize investment in certain designated low income or distressed communities (known as “qualified opportunity zones”). The IRS recently released Notice 2018-48, which provides a complete list of these designated opportunity zones. The list, segregated by state, provides census tract data for each opportunity zone.
Investment Incentive
Investment in these opportunity zones, made through “qualified opportunity zone funds,” is tax advantaged. Capital gains from the disposition of unrelated property that are invested in these funds are deferred until, potentially, December 2026, and 10% or 15% of that gain may be eliminated based on the investor’s holding period in the fund.[1] Moreover, a ten-year holding period in the fund eliminates tax on any subsequently realized appreciation in the fund investment.
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