The Opportunity Zones program was established by Congress in the Tax Cuts and Jobs Act (TCJA) to encourage investment, development and redevelopment in low-income urban and rural communities, designated as Qualified Opportunity Zones (QOZs). Eligible taxpayers with capital gains can invest in an Opportunity Zone Fund and potentially receive tax incentives.
The U.S. Department of the Treasury has certified almost 8,800 census tracts as QOZs, including tracts in every state, Washington D.C., Puerto Rico, and the U.S. Virgin Islands. IRC Section 1400Z-2 provides three main tax incentives for such investments.
- Capital gain deferral until December 31, 2026
- Permanent exclusion of up to 15 percent of the original gain
- Permanent exclusion of gain eventually recognized upon the sale of the QOF investment
The IRS published FAQs with more information on opportunity zones that can be accessed here.
A list and map of all QOZs can be found on the Treasury Department’s CDFI Fund website and can be access here.
If you are interested in investing in an Opportunity Zone Fund, Brown Smith Wallace can work with you to determine what options are available and what strategies to implement to make the most of your investment. Contact one of our tax experts today.