Opportunity zones, created by the Tax Cuts and Job Act, are economically distressed communities, which provide powerful tax benefits to investors and were designed to contribute to economic development.
Real estate developers, fund sponsors, and property owners have been eagerly awaiting guidance on how to take advantage of opportunity zones. On Friday, October 19, 2018, the IRS issued proposed regulations. While the proposed rules would generally be effective only after they are issued as final regulations, taxpayers are permitted to rely on the proposed regulations, so long as they rely on them in their entirety and in a consistent manner.
The new qualified opportunity zone incentive provisions allow taxpayers who recognize a gain from the sale of an asset (including non-real estate assets such as stocks or securities) to defer the tax on the gain by reinvesting the proceeds from the sale within 180 days into a Qualified Opportunity Fund formed and operated for the purpose of investing in certain Qualified Opportunity Zones which have been designated in parts all 50 states, the District of Columbia, and all five U.S. territories. The incentive program also exempts from tax the gain on any Qualified Opportunity Zone investment held for at least 10 years.
To view the IRS's interactive map of all Opportunity Zones, click HERE.
To learn more, contact any member of our Tax Group.
Members of the Goulston & Storrs Tax Group are skilled in assisting clients with the following issues related to Opportunity Zones:
- Affordable housing and tax credit matters
- Asset, property management, & operational issues
- Financing components (senior, mezzanine, and preferred equity)
- Fund formation & structuring
- Opportunity business investments
- Real estate acquisitions & dispositions
- Securities offerings & compliance
- Tax compliance, structuring, and other related matters