The Opportunity Zone Tax Incentive, set forth in Internal Revenue Code Sections 1400Z-1 and 1400Z-2, allows taxpayers to defer gain from the sale of property, in some cases permanently where certain requirements are met. Even if a taxpayer does not have gain on which it seeks to defer tax, the Opportunity Zone Tax Incentive provides a permanent deferral opportunity for any appreciation in a relevant investment, provided that investment is held for at least ten years. To qualify for these incentives, taxpayers must invest in a “qualified opportunity fund,” which means an qualified opportunity fund investments is a vehicle organized as a corporation or a partnership that invests in a business in a low-income area that has been specifically designated as a “qualified opportunity zone.”
This means that new investors will be seeking investments that will qualify for these benefits. A surge of new investor interest is expected to occur over the next few years. Real estate developers should act quickly to determine if one or more of their real estate developments will qualify for investment from Opportunity Funds, and if so, us today about the steps necessary to bring this new source of capital into their development projects.