The New Opportunity of Opportunity Zones

The Registry (November 20, 2018) The 2017 Tax Cuts and Jobs Act that went into effect this past February contains a new program called “opportunity zones,” which incentivizes investments and job creation in economically distressed communities. In October of 2018, the U.S. Treasury Department unveiled a number of new rules and regulations designed to provide clarity and answer lingering questions about the tax implications of investing in these newly-designated areas, of which there are 879 in California alone. We turned to Allen Matkins partners and opportunity zone experts Matt Ertman and Mike Pruter to help explain this investment opportunity and how potential investors can capitalize on it.

What is an opportunity zone?

An opportunity zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. The Tax Cuts and Jobs Act, signed into law in December, 2017, created a new tax incentive program that encourages investors to make long-term financial investments in Qualified Opportunity Zones (QOZs). In exchange, the investor receives a number benefits related to the deferral of capital gains taxes.