The U.S. Department of the Treasury (Treasury) has released proposed regulatory guidance on Opportunity Zones. These long awaited proposed regulations will help investors and local governments determine the types of developments eligible for Opportunity Funds investment.
The Opportunity Zones tax benefit holds tremendous opportunity for local governments and is the first community development tax incentive program created since the Clinton Administration. Investors will be able to receive a temporary tax deferral and other tax benefits by investing unrealized capital gains into Opportunity Funds for a minimum of five years.
Treasury’s proposed regulations address many questions about the Opportunity Zones tax benefit including the eligibility requirements for taxpayers to defer capital gains through Opportunity Fund investment and how corporations or partnerships can self certify and qualify as an Opportunity Fund. Additionally, a revenue ruling was also released to address the “original use” requirement for real property in section 1400Z-2(d)(2)(D)(i)(II), and the “substantial improvement” requirement in sections 1400Z-2(d)(2)(D)(i)(II) and 1400Z-2(d)(2)(D)(ii).
Secretary Steven T. Mnuchin said of the proposed regulations, “We want all Americans to experience the dynamic opportunities being generated by President Trump’s economic policies. We anticipate that $100 billion in private capital will be dedicated towards creating jobs and economic development in Opportunity Zones. This incentive will foster economic revitalization and promote sustainable economic growth, which was a major goal of the Tax Cuts and Jobs Act.”
NALHFA’s government relations team will be submitting comments on the proposed regulations to Treasury. If you have comments you would like to be included, or if you have any questions on this guidance, please contact NALHFA’s Policy Director Heather Voorman at firstname.lastname@example.org or at 202-367-2405.