Opportunity Funds are a new class of investment vehicles authorized to aggregate and deploy private investment into Opportunity Zones.
Originally introduced in the Investing in Opportunity Act (IIOA), the Opportunity Zones Program was enacted as part of the 2017 tax reform package (Tax Cuts and Jobs Act). The program is designed to drive long-term capital to rural and low-income urban communities throughout the nation and uses tax incentives to encourage private investment in impact funds. Minnesota has multiple opportunities for quality Opportunity Zone investing and is expected to be a major development driver over the next 10 years.
OPPORTUNITY ZONES 101
Tax Cuts & Jobs Act of 2017 introduced Opportunity Zones
Creates tax incentives on capital gains invested in Opportunity Zones
Opportunity Zones are selected by the stated census tracts for areas with > 20% poverty rates
Economic development for distressed communites
"By changing the way capital gains are treated, encouraging long-term
investments in distressed communities in exchange for a break on capital gain taxes, we believe we will see hundreds of billions of private dollars invested in low-income communities." -Senator Tim Scott
WHY INVEST IN
Businesses that relocate within Opportunity Zones have different benefits but can also pay no capital gain taxes if they remain in the zone for 10 years and abide by the governing rules. Businesses can also accept investments from investors who can invest capital gains. Investors will be sheltered from capital gain taxes if the business invested in remains in the Opportunity Zone for greater than 10 years. Please contact us for additional information and locations for your company to consider.
Reinvest realized capital gain in an OZ Fund
Tax on original capital gains is reduced by 10%
Tax on original capital gain is reduced by an additional 5%
Deferred capital gains is recognized. Pay 85% of original capital gain
Can sell OZ fund interest free of US federal income tax