Opportunity Zone Magazine Opportunity Zone Magazine Volume 1, Issue 1 | Page 53

UTILIZING OPPORTUNITY ZONES TO PARTNER WITH NON-PROFITS & SOCIAL ENTERPRISE TO IMPROVE PROFITS & PEOPLE’S LIVES
T
he Tax Cuts and Jobs Act of 2017 established what could be
the most impactful economic incentive of the 21st Century
– Opportunity Zones. From real estate developers to
wealth management funds to government officials, interest in this
innovative economic development engine is sky-rocketing. 2026, whichever comes first. If held 5 years, investors obtain a
10 percent step-up in basis, and if held seven years, the step-up
increases to 15 percent, effectively reducing the capital gains tax,
which is paid Dec. 31, 2026. Finally, and most importantly, if held
10 years, there is no tax on the profits from the QOF investment.
Qualified Opportunity Zones enable investors to obtain special
treatment of capital gains on the sale of an asset if the proceeds
are reinvested through a Qualified Opportunity Fund (QOF)
within 180 days into one of 8,700 low-income census tracts
designated by the U.S. Treasury. There are several benefits to
making investments in QOZs, including: An initial deferral of
capital gains tax until the sale of the acquired asset, or Dec. 31, Designed to spur long-term investments in low-income urban and
rural communities across the country, Treasury Secretary Mnuchin
estimated 2019 Opportunity Zone investment could reach $100
billion. For perspective, there is an economic development
heuristic that indicates that for every $1 billion invested, 10,000
jobs are created. If the Secretary is correct, that level of investment
will create 2.5 million jobs in Opportunity Zones.
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