Full Citation
Title: Did States Maximize Their Opportunity Zone Selections? Analysis of the Opportunity Zone Designations
Citation Type: Miscellaneous
Publication Year: 2018
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Abstract: The Tax Cuts and Jobs Act included a new federal incentive-Opportunity Zones-to spur investment in low-income and undercapitalized communities. This incentive could become the nation's largest economic development "program," but its potential for positive impact depends first on the decisions of America's governors. April 20, 2018 was the final deadline for governors (and the mayor of the District of Columbia) to select which among the roughly 56 percent of eligible census tracts should be classified as Opportunity Zones. Of the eligible tracts, governors were able to designate 25 percent (or at least 25 tracts in states with fewer than 100 qualified tracts) as Opportunity Zones. The incentive provides the following three tax benefits for equity investing in Opportunity Zones: Permanent exclusion of taxable income on new gains. For investments held for at least 10 years, investors pay no taxes on capital gains produced through their investment in Opportunity Funds (the investment vehicle that makes investments in Opportunity Zones). Basis step-up of capital gains invested. For capital gains placed in Opportunity Funds for at least five years, investors' basis on the original investment is increased 10 percent. If invested for at least seven years, investors' basis on the original investment is increased 15 percent. Temporary deferral of capital gains. Investors can place existing assets with accumulated capital gains into Opportunity Funds. Those capital gains are not taxed until the end of 2026 or when the asset is disposed of.
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Authors: Theodos, Brett; Meixell, Brady; Hedman, Carl
Publisher: Metropolitan Housing and Community Policy Center
Data Collections: IPUMS NHGIS
Topics: Other
Countries: United States