What is an Opportunity Zone?
Established by Congress in the Tax Cuts and Jobs Act of 2017, Opportunity Zones help encourage long-term investments in low-income communities nationwide. According to the Economic Innovation Group (EIG), Opportunity Zones are “an innovative, flexible, and bipartisan solution for harnessing capital in service of community development.”
In other words, the Opportunity Zones program is designed to incentivize private investments in designated low-income areas. Investors can realize significant federal tax benefits by investing capital gains in Qualified Opportunity Funds. Those tax benefits increase the longer investments remain in Opportunity Funds and include tax deferrals and elimination. Opportunity Funds are then required to invest in qualified projects in Opportunity Zones.
What are the Investor Benefits in an Opportunity Zone?
According to EIG, the Opportunity Zones program offers investors three incentives for putting their capital to work rebuilding economically distressed communities:
1. A temporary deferral: An investor can defer capital gains taxes until 2026 by putting and keeping unrealized gains in an Opportunity Fund.
2. A reduction: The original amount of capital gains on which an investor has to pay deferred taxes is reduced by 10% if the Opportunity Fund investment is held for 5 years and another 5% if held for 7 years.
3. An exemption: Any capital gains on investments made through the Opportunity Fund accrue tax – free as long as the investor holds them for at least 10 years.
Where is Decatur’s Opportunity Zone?
Click here and zoom in to see a map of Decatur’s Opportunity zone. It is concentrated on the downtown area and the Main Street and Eldorado Street corridors. The area is roughly bounded by 22nd Street on the east, Garfield Street on the north, Lake Decatur to the south and Millikin University to the west. See sites and buildings on the market here.
The U.S. Treasury Department is formulating specific rules and guidelines for accessing Opportunity Zone benefits. This information will be posted on this site as soon as it is made available.
Where can I find more resources?
We’re happy you asked. Check out these great resources to learn even more about Opportunity Zones.