Opportunity Zone
Opportunity Zones are an economic development tool designed to stimulate economic growth and job creation in low-income communities across the United States by allowing investments in designated census tracts. Created to spur economic development in distressed areas, Opportunity Zones offer tax benefits to investors. There are approximately 8,764 Opportunity Zones in the United States and related possessions.
Qualified Opportunity Zones
Qualified Opportunity Zones were established as part of the bipartisan 2017 Tax Cuts and Jobs Act to encourage investment in underfunded, second- and third-tier communities in the U.S. There are more than 8,764 designated Qualified Opportunity Zones located in all 50 States, the District of Columbia, and five United States territories.
To qualify as an opportunity zone, census tracts must have:*
- A community poverty rate of 20% or higher
- A median family income of no more than 80% of the statewide median family income
- No more than 80% of the greater statewide median family income or the overall metropolitan median family income
Investors access Opportunity Zones through Qualified Opportunity Zone Funds (QOFs)
Why invest in a Qualified Opportunity Zone Fund:
- Overview: This program enables investors to temporarily defer capital gains on the sale of a stock, business, or partnership interests that are reinvested into a designated QOF.
- Timeline: Investors who keep their funds invested in a QOF for 10 years or longer will receive their capital gains from the growth of their QOF investment tax free.
- Tax Incentive: Similar to a ROTH IRA, investors who are concerned about a higher tax environment in the future are more inclined to invest in vehicles whose future distributions are tax free.
- Capital Gains: Investors must contribute a portion or all of their capital gains into a QOF, which then invests in one or more of the 8,764* Qualified Opportunity Zones around the U.S. The investment is either in real estate development or directly into a Qualified Opportunity Zone Business.