As part of the Tax Cuts and Jobs Act passed at the end of 2017, Congress provided new tax benefits for investments in designated Opportunity Zones. While the specifics of the new law are still being ironed out, through the enactment of further regulations, the Opportunity Zone program is worth a further look for investors seeking preferential tax treatment for capital gains.
Opportunity Zones, covering parts of all 50 states, the District of Columbia and five U.S. Territories, are designed to spur economic development by providing tax benefits for investors. Governor John Carney selected 25 census tracts across the State of Delaware as Opportunity Zones in April 2018. The designated Opportunity Zones are intended to spur additional private sector investment in economically-distressed properties across the State. Under the Act, prospective investors are incentivized to sell appreciated property and to reinvest the gains into qualified Opportunity Zone projects. The incentives consist of tax deferral on prior gains invested in a Qualified Opportunity Fund (QOF), as well as a potential step up in basis for the QOF investment. Read more.