Established as part of the Tax Cuts and Jobs Act of 2017
, opportunity zones provide tax incentives for investors with capital gains to invest in underserved areas affected by poverty and unemployment. More than 8,700 zones, or approximately 11% of all Census tracts in the United States, have been identified for investment, and the federal government is now working to coordinate other federal initiatives with the opportunity zone program, according to HUD Secretary Ben Carson
Carson shared with the NAHB board of directors
last month at the International Builders' Show (IBS): "The primary source for opportunity zone investment comes from the estimated $2.2 trillion of unrealized capital gains in stocks and mutual funds held by corporations and individuals. That’s one reason the Department of Treasury estimates that opportunity zone enterprises may attract more than $100 billion in private investment."
To maximize the tax benefits, investors must keep their capital invested for periods of five, seven or 10 years
. Carson pointed out the intent of this program is to promote long-term investment and avoid rewarding "fly-by-night speculators." However, as a new tax incentive, many building industry members are still unclear on how to take advantage of this incentive.
Steve Friedman of CohnReznick and Richard Price of Nixon Peabody sought to provide clarity during the IBS education session, "How Builders & Developers Can Use the New 'Opportunity Zone’ Tax Incentive Program
Moderated by Dean Schwanke, NAHB vice president of multifamily housing, the panelists presented guidelines on:
- Who can invest in Qualified Opportunity Funds (QOFs),
- What partnerships and properties can qualify, and
- What the structure and timeline of the investment could look like.
The panelists also conducted a rolling question-and-answer session to address specific points of interest. Download the handout
, or purchase a recording of the session
to see their full presentation.
For more information on opportunity zones, contact JP Delmore
or visit NAHB’s Opportunity Zones
resource page. Included are answers to frequently asked questions
to the proposed regulations, as well as a copy of the public comments
NAHB submitted to the IRS in December for further clarification on terms and statutes.
Final regulation from the IRS is still pending.
Note: NAHB is providing this information for general information only. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind nor should it be construed as such. Investors and taxpayers should consult with a qualified professional prior to making any investment or financial decisions.