Policy Issues

Roundtable Comment Letter Recommends Additional Guidance from Treasury and IRS to Accelerate Capital Investment in Opportunity Zones

December 18, 2018

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The Real Estate Roundtable provided formal comments regarding opportunity zones to the Treasury Department and the IRS.  The letter encourages Treasury to clarify a number of tax issues that would remove uncertainty for potential investors and opportunity fund managers.  This is the second Roundtable comment letter on opportunity zones, following Treasury‚Äôs publication of proposed regulations in October. (Roundtable Weekly, Oct. 19) The October proposed rules provided a strong foundation for opportunity fund formation and investment.  Building on the rules, the Roundtable letter prioritizes five areas where additional guidance from Treasury would accelerate the pooling of capital and job creation in opportunity zones.  The letter recommends that Treasury:

  • Remove barriers to the formation of multi-asset opportunity funds through flexible exit rules;
  • Clarify the circumstances in which land and previously vacant buildings constitute qualified opportunity zone business property;
  • Allow appropriate refinancing of opportunity fund assets and avoid overly restrictive debt-distribution rules;
  • Encourage continued investment in opportunity zones with flexible gain reinvestment, roll-over, and holding period rules at the investor, fund, and business level; and
  • Provide additional protections in the working capital safe harbor and the substantial improvement rules for taxpayers making a good faith effort to comply with opportunity zone requirements

The Roundtable comments are the product of an active Tax Policy Advisory Committee (TPAC) Opportunity Zone Working Group that includes leading real estate developers, owners, investors, lenders, industry organizations, and outside advisors. The TPAC working group will continue to work closely with government officials to help ensure the program fulfills its ambitious objective of stimulating economic development and job creation in low-income communities.