The federal tax bill passed on Dec. 18, 2017, included the Opportunity Zone program, which gave states the chance to examine census tracts and nominate low-income areas with potential for long-term investment to be targeted for a tax-incentive program.
After being designated by the U.S. Department of Treasury, Ohio’s 320 Opportunity Zones began generating attention from investors interested in taking advantage of their favorable tax benefits. Meanwhile, communities, potential project owners, and economic development organizations are eager to provide opportunities to investors.
Opportunity Zones, created in the 2017 Tax Cut and Jobs Act, encourage long-term investments in low-income urban and rural areas nationwide.
A few facts:
- Working with the U.S. Treasury, Ohio established 320* Opportunity Zones throughout 73 of its 88 counties.
- The zones were selected based on submissions by local government officials and nonprofit and economic development organizations.
- Long-term investments in designated opportunity zones provide tax benefits for investors to maximize unrealized capital gains.
- In Ohio, Opportunity Zones are available in large cities, small communities, and Appalachian counties.
* Ohio recommended 320 census tracts (25 percent of 1,280 eligible tracts), its full allocation.
Questions and Answers
Yes. Opportunity Funds allow a broad array of investors to pool their resources in Opportunity Zones, increasing the scale of investments going to underserved areas.
For an extended list of Q&As, visit the IRS.
The Internal Revenue Service (IRS) confirms that the boundaries of designated qualified opportunity zones (OZs) were established at the time they were designated in 2018 by using 2010 decennial census tracts. The OZs are unaffected by any 2020 decennial census changes.
The Opportunity Zone program enables investors with capital gains tax liabilities to receive favorable tax treatment for investing in Opportunity Funds certified by the U.S. Treasury. Opportunity Funds provide investors with tax deferral options and potentially permanent exclusion from the taxable income of capital gains.
The Opportunity Funds use the capital invested to make equity investments in businesses and real estate in Opportunity Zones.
An Opportunity Zone is a low-income community where new investments may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury.
Opportunity Zones are an economic development tool designed to spur economic development and job creation in low-income communities.