Opportunity zones are economically distressed areas across the US, which require serious investments to start flourishing. These areas are in heavy need of investments, and revitalization is created by creating more job opportunities in the respective area. The main purpose of an opportunity zone is to push economic growth and create more jobs and of course, the opportunity funds also bring several benefits for the investor. So how to create an opportunity fund?
These low-income communities are designated through population census tracks. Based on these census tracts will these areas qualify as opportunity zones. The governors of each state nominate a list containing the eligible tracts so that official designation as opportunity zones can begin. On the main website of the IRS you can find very detailed information about the census tract eligibility criteria, the designation process, and the other nomination criteria. Currently, there are approximately 9,000 opportunity zones available across the US. Most of these regions that are designated as opportunity zones have seen several decades of general poverty, without significant investments in the area. Approximately a quarter of all the opportunity zones can be found in rural areas.
To incentivize investments in low-income areas, the federal government came up with a “reward’ system for the investors. There is a wide range of tax benefits that investors can enjoy if they choose to invest in an opportunity fund. An opportunity fund is an investment tool – just like a business partnership-with the main aim to invest in different assets within the qualified opportunity zones.
For a corporation to become eligible for a qualified opportunity fund, it should fill out the 9996 Form including the federal income tax. To be eligible for the tax deductions, qualified opportunity funds must keep most of their investment/assets in the designated opportunity zones (90% of their investments). How to create an opportunity fund? It is not the easiest venture, but it is not an impossible one. You can also get legal help and assistance from an attorney.