Bingham Greenebaum Doll LLP has assembled an interdisciplinary team of tax, real estate, securities, and other attorneys to provide specialized advice related to opportunity zones. The opportunity zone program was created by the 2017 Tax Cuts and Jobs Act. The program is designed to incentivize development in certain areas by providing significant tax benefits to the investors. There are three main benefits.
- Deferral: By reinvesting a capital gain into a Qualified Opportunity Fund (“QOF”), a taxpayer can defer the tax on the capital gain until 2026.
- Discount: When the tax on the deferred capital gain is due in 2026, the taxpayer can receive up to a 15% discount on the tax liability.
- Exclusion: If the taxpayer holds the interest in the QOF for at least 10 years, any gain on the sale of the QOF is excluded from federal tax.
A QOF must directly have 90% of its assets located within an opportunity zone, but with proper structuring the overall percentage of assets within the zone could be as low as 63% under currently proposed regulations. We advise clients on opportunity zone investments across the country, but as an example of the abundance of opportunity zones, below are maps of opportunity zones in Louisville, Indianapolis, and Lexington:
Louisville Opportunity Zones
Indianapolis Opportunity Zones
Lexington Opportunity Zones
An interactive map of opportunity zones can be found here. Click on the “Layers” tab on the menu on the right hand side of the screen. Select “Opportunity Zone Tract” and unselect “2011-2015 LIC Census Tract,” and zoom in to a specific area on the map. Designated qualified opportunity zones will appear in blue.