Opportunity zones are designed to incentivize investment and economic development in underserved communities. Established as part of the Tax Cuts and Jobs Act of 2017, developers may use a Qualified Opportunity Fund (QOF) to help fund projects located within an opportunity zone. This new source of investment dollars could prove to be a powerful economic tool if properly administered.
Under the statute, investors can create a QOF that would allow them to realize significant tax savings, as long as 90% of the fund’s assets are invested in qualified property and businesses within an opportunity zone.
The law allows investors to defer federal taxes on any capital gains income invested in a QOF. Additional tax benefits are provided for long-term investors.
However, these tax benefits are time-constrained. The deferral expires Dec. 31, 2026, requiring investors at that point to pay taxes on any deferred gains still invested in a QOF.
More information on opportunity zones can be found in these NAHB resources and blog posts:
You can also learn more at these government links:
IBS Education Session
At the 2019 International Builders’ Show in Las Vegas, NAHB will be hosting the education session How Builders & Developers Can Use the New ‘Opportunity Zone’ Tax Incentive Program from 8:30-9:30 a.m. on Wednesday, Feb. 20.
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