Real Estate Opportunity Zones

Opportunity Zones, recently established in the Tax Cuts and Job Act, are economically challenged areas throughout the country. Significant tax benefits were created at the same time to stimulate investment in these areas.

These tax benefits allow taxpayers to defer recognition of capital gains by reinvesting the gains within 180 days into “Qualified Opportunity Funds.”  The program also provides tax forgiveness in the form of 10% forgiveness for investments held for at least 5 years and another 5% forgiveness for investments held for at least 7 years.  Gains or appreciation on investments in Opportunity Funds are also exempt from tax if held for at least 10 years.

This powerful three punch of tax deferral, tax forgiveness and tax exemption provides the tools for what many consider to be a once in a generation investment opportunity.  To take the fullest possible advantage of the tax benefits, investments must be made before the end of 2019.

Although the above summary seems simple there are complex issues related to the establishment of qualified funds, the tax deferral and other very specific details and requirements. Longer term investments involving development, redevelopment and construction are preferred under the program.

We are actively working with clients on the planning for and the implementation of these investments in areas including: Tax, Real Estate, Construction, Land Use and Estate Planning.