In July 2018, the U.S. Department of the Treasury certified 8,700 Opportunity Zones (OZs) that qualify for tax incentives created by the Tax Cuts and Jobs Act of 2017, meaning that developers and investors who revitalize properties in these zones will receive these benefits. The goal was to attract capital for addressing affordable housing shortages and creating jobs in low-income communities.
However, the initial regulations left most investors scratching their heads. Many investors seemed interested, but unwilling to take advantage of the incentive until the U.S. Treasury answered a few key questions. This past fall, the U.S. Treasury department issued an updated and improved guidance, and we are happy to report that many of these questions have been answered.
In our latest report, we grouped the updates into four different categories: those concerning gains, OZ businesses, Qualified Opportunity Funds (QOF), or building and land matters. Our report shows several important clarifications made within each category, the top four being:
While the latest updates address enough of the original ambiguities to promote investor participation, there are still significant questions that will need to be addressed moving forward, and we expect the Treasury to issue further guidance moving forward.
In the meantime, we are monitoring where in the country funds are gaining the most traction, and what structures and products are most attractive. Our goal is to create the bridge between the funds and the developers and investors that can best take advantage of this unique capital source.
Download our report to read our comprehensive analysis and contact us with any comments or questions.
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