Policy Issues

OPPORTUNITY ZONES

ISSUE

An Opportunity Zone is a low-income, economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment.  The tax benefits can include the deferral of tax on invested capital and the exclusion of capital gains tax on fund investments held for 10 years or more.

Explore an interactive map of all Opportunity Zones from the Economic Innovation Group.

FAQs from the IRS

 

Position

The Treasury Department’s final Opportunity Zone implementing regulations should seek to spur economic growth and opportunity by maximizing the flow of real estate investment, capital, and jobs into the designated communities. The ability of Opportunity Zones to unlock private capital for real estate investment will be a principal determinant of the program’s effectiveness.

As Roundtable President Jeffrey DeBoer has noted, "[f]or real estate, the proposed regulations are unquestionably positive. They clarify key technical questions and open issues, and they should allow investments in funds and in underlying projects to go forward. While some important questions remain, we continue to believe that the Opportunity Zone program will be a powerful catalyst for transformational real estate investment in these designated low-income areas."  (Roundtable Weekly, Oct, 26, 2018)

The Roundtable is actively working with Congress and the Treasury to answer critical questions, address concerns, and expedite the final rulemaking process. The TPAC Opportunity Zone Working Group has an ongoing, active dialogue with government officials to help ensure the program fulfills its ambitious objectives of stimulating economic development and job creation in low-income communities.

 

Background

Congress created Opportunity Zones in the 2017 Tax Cuts and Jobs Act to encourage long-term, capital investment in economically struggling, low-income communities.  Opportunity Funds must invest in tangible business property located in a qualifying zone.  Such property can include real estate.  Tax benefits are tied to the investment holding period.  The capital gain on an Opportunity Fund investment is excluded from tax altogether if the asset is held for 10 years or more.

The Treasury Department in June designated more than 8,700 low-income census tracts in the United States, Puerto Rico, and territories as qualified Opportunity Zones. (Explore an interactive map of OZs from the Economic Innovation Group.)

In October, Treasury issued Proposed Regulations governing the new "Opportunity Zone" investment program.  The potential for the program to spur productive real estate investment in struggling, low-income communities – is the focus of an Oct. 26 GlobeSt.com interview with Real Estate Roundtable President & CEO Jeffrey DeBoer and Roundtable SVP and Counsel Ryan McCormick. 

Some capital has remained on the sidelines as taxpayers wait for additional guidance on how the program will work for investors and funds alike.

In April 2019, Treasury released a highly anticipated second set of proposed regulations on Opportunity Zones.  The rules expanded on the previously proposed regulations and favorably addressed a variety of Opportunity Zone investment issues. (Roundtable Weekly, April 2019)

In July 2019, the Roundtable submitted a third comment letter encouraging government officials to include 10 key clarifications in the final Opportunity Zone regulations. (Comment Letter)


Other Resources

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