What is the Opportunity Zone Program?
Politicians developed the Opportunity Zone program in 2017. Conceived as a win-win proposition, the “OZ” program funnels investment capital into economically distressed areas while providing a legal tax shelter for high-net-worth taxpayers.
Investors can reinvest capital gains into startups and businesses in a designated opportunity zone. In exchange, they’re allowed to defer — or even eliminate — tax responsibilities tied to invested money.
According to the Treasury Department, the updates will ensure the program’s success and clarify how investors can apply funds. It also allows for greater flexibility in deploying capital.
“Regulatory certainty is vital for a thriving market,” said John Lettieri of the Economic Innovation Group, an architect and champion of the Opportunity Zone program. The lack of regulatory certainty, Lettieri explained, has hindered the program. He hopes the rule clarification will jumpstart the program.
Opponents and Supporters of the Opportunity Zone Program
The Opportunity Zone program changes are being praised by some and criticized by others.
Opponents argue that the new regulations lack the necessary definition to ensure the investments help desired communities.
One vocal critic is US Senator Ron Wyden. He claims the new rules make it easier for tax-dodging corporations to invest in Opportunity Zones without ensuring the money benefits communities. As a potential remedy, the Oregon senator introduced legislation that would require fund investors to disclose more information about the potential positive impact of projects.
Proponents of the Opportunity Zone regulations say the new rules make it easier for projects to qualify for tax incentives. They also claim it allows more business sellers to invest capital in an Opportunity Zone project. They argue that, ultimately, the net effect is that more capital will flow into Opportunity Zones and developers will be more likely to fix up old and vacant properties in distressed areas.
Is the Opportunity Zone Program A Way For You To Reduce Your Taxes?
The Gordon Law Group works with individual investors and funds that want to explore the Opportunity Zone program for compliant tax-sheltering purposes. We’ll walk you through the details and help determine if it’s an opportunity that makes sense for you.
