One provision of the Tax Cuts and Jobs Act (TCJA) was designed
to encourage economic growth in low-income areas. This new tax
break allows investors to defer—or even eliminate—their
capital gains taxes on investments in "Opportunity
Zones." Late in 2018, the IRS issued proposed regulations that
answer some questions that real estate investors have asked about
these tax incentives.
What's the benefit for investors?
More than 8,700 communities in all 50 states, the District of
Columbia and five U.S. territories have been designated as
qualified Opportunity Zones. Investors can form private qualified
opportunity funds (QOFs) for development and redevelopment projects
in the zones. The funds must maintain at least 90% of their assets
in qualified Opportunity Zone property, including investments in
new or substantially improved commercial buildings, equipment and
multifamily complexes, as well as in qualified businesses.
