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The Opportunity Zone Program

Key Program Highlights

The Opportunity Zone program provides a unique investment opportunity with significant tax benefits for investors. By deferring and potentially reducing capital gains taxes on investments in designated Opportunity Zones, the program incentivizes private capital to flow into economically distressed communities across the United States. This not only offers lucrative tax advantages for investors, but also has the potential to drive impactful social change. Opportunity Zone investments can catalyze economic development, create jobs, and improve community infrastructure in underserved areas, ultimately uplifting the lives of residents and addressing longstanding inequalities. Through this innovative program, investors can capitalize on attractive tax savings while simultaneously making a positive difference in the lives of those living in Opportunity Zones.

Incentivizing revitalization where potential abounds

Current Tax Incentives

  • The program allows capital gains to be deferred until the 2026 tax year if invested into a Qualified Opportunity Zone Fund within 180 days of realizing the gain.

  • Normally, when an investment property is sold, any depreciation deductions previously claimed must be "recaptured" and taxed as ordinary income. However, Opportunity Zone investments allow investors to avoid this depreciation recapture tax. 

  • If an investor hold the Qualified Opportunity Zone Fund for at least 10 years, the investor can elect to permanently exclude any post-investment appreciation.  The investor reserves the right to hold the QOF until 2047.

Are Opportunity Zones Working

The short answer is too early to tell.  Evaluating the full impact of a socioeconomic program like the Opportunity Zone initiative can take several years, and the appropriate metrics to measure success will depend on the program's specific goals and objectives.

 

Some key considerations around the timeline and metrics for evaluating Opportunity Zones:

Timeline for Evaluation:

  • Programs targeting community economic development typically require 5-10 years to see meaningful, measurable impacts.

  • The Opportunity Zone program went into effect in 2018, so a comprehensive assessment is likely still 3-5 years away.

  • Early data and reporting can provide insights, but longer-term analysis is needed to fully understand the program's effects.

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Potential areas to study will be employment rates, new business activity, household income rates and crime levels amongst many other metrics.  The most recent study into the OZ program was  performed by by Kenan Fikri and Benjamin Glasner, PhD and can be seen here.

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