The opportunity zones program has been established by the government as a means to attract private investments to more distressed areas and communities across the country. Instead of making public investments or pouring taxpayer money into these communities, the Government decided to offer tax benefits to those who invest in such communities. Corporations or partnerships can make investments in certain properties available in such areas.
The main goal of the opportunity zones program is to help distressed areas flourish. With these investments, the communities will see better job opportunities and the entire community will enjoy economic development. Private investors are invited to invest into what is called a qualified opportunity zone. In order to qualify for the program, the fund must own at least 90% of its assets in such qualified opportunity properties. Investors also need to keep reinvesting the profits in order to push the economic development levels even higher. When improvements are finalized, investors can freely sell the given property and earn cash profits, but also gain many tax benefits.
An opportunity zones program has a bi-directional focus: job creation & economic growth in lower income communities and offering great tax benefits to investors. The Opportunity Zones program was created in 2018, and several thousands of communities across all 50 states qualify for the program. The program calls for long-term investments in low-income communities, and the investments are made through the U.S. Treasury Qualified Opportunity Zone Funds. Also, not all the opportunity zones can be found in low-income communities. There are many newly designated opportunity zones that can be found in more economically developed areas.
It is important to know that capital gains taxes are deferred in case the investment is re-invested into these property zones. Also, if the investment is held for a period of 10 years, all the gains on the new investment will be waived.