INVESTMENTS IN QUALIFIED OPPORTUNITY ZONES OFFER SIGNIFICANT U.S. AND POTENTIAL STATE TAX SAVINGS
This piece was originally generated by Frank Hirth. Please see their website for more information here.
A new Federal program, which did not get much attention early on, was created with the 2017 Tax Cuts and Jobs Act signed into law on December 22nd, 2017. Qualified opportunity zones (QOZ) were created under new Internal Revenue Code section 1400Z to incentivize investors by, among other things, allowing them to temporarily defer capital gains that have been reinvested in real property or businesses located in a designated census tract that is considered a QOZ. As of the publication of this article all 50 states and some U.S. territories have designated areas for QOZ investment and these can be found on the U.S. Department of Treasury website: https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx
The program was designed to stimulate economic development in economically-distressed communities by offering tax benefits to investors. This article will outline the main characteristics of a QOZ and the Qualified Opportunity Fund (QOF) which must be created as the investment vehicle to invest in eligible QOZ property.