DC Commercial | Investing in Opportunity Zones
Investing in Qualified Opportunity Funds
The Investing in Opportunity Act, a special provision in the 2017 Tax Cuts and Jobs Act, is an innovative economic development tool designed to spur long-term private sector investments in designated Qualified Opportunity Zones (QOZs), located in 8,762 low-income urban and rural census tracts throughout the United States With an estimated $6.1 trillion of unrealized capital gains eligible for reinvestment in Opportunity Zones, the Act could create several hundred-thousand jobs and generate enormous loan demand from community and regional banks to facilitate construction.
The Investing in Opportunity Act allows a taxpayer to invest realized capital gains into an investment vehicle called a Qualified Opportunity Fund (QOF), in a designated QOZ in exchange for capital gains tax incentives. The tax benefits include:
• Deferral of tax on invested gains until the earlier of 12/31/2026 or disposition of the QOF
• 10% of the deferred gain is permanently forgiven if the QOF is held for at least five years
• 15% of the deferred gain is permanently forgiven if the QOF is held for at least seven years
• An investor would pay no further tax on any additional gain if the QOF is held for at least 10 years
There are nearly 400 census tracts designated as Qualified Opportunity Zones in Virginia, Maryland, and the District of Columbia.
Greysteel's DC Commercial Team has two current listings located within Opportunity Zones in the Greater Washington, D.C. Metropolitan Area.
For additional information, please contact Benjamin W. Wilson.