The Tax Cuts and Jobs Act of 2017 (better known as the tax reform bill) created a significant—and little-discussed—economic development program that encourages long-term investments in so-called “Opportunity Zones” by offering temporary tax deferral for capital gains re-invested in the Opportunity Zone and a permanent exclusion for gains from the Opportunity Zone investment. This program has the potential to be one of the most significant economic development programs in the country and has broad applicability to a variety of industries. Any person or business seeking to invest capital, raise capital, or that will recognize significant capital gains in the next few years should be aware of the benefits of this program.
What are Opportunity Zones? Opportunity Zones are low-income areas (determined on a census tract basis), which are designated by the governor of each state as Opportunity Zones. Each governor must designate his or her state’s Opportunity Zones from the pool of eligible low-income census tracts and certain contiguous tracts.