The IRS released guidance this month clarifying the designation process for Opportunity Zones, a new tax incentive created in the Tax Cuts and Jobs Act that allows investors to defer paying capital gains taxes by investing their unrealized capital gains into a new investment vehicle, Opportunity Funds. Enterprise’s Rachel Reilly Carroll noted in a recent Next City article on Opportunity Zones that “there’s room to create products with the potential to unlock new capital for the broader community development ecosystem.” However, governors only have until March 21 to either nominate 25 percent of their state’s distressed census tracts as Opportunity Zones or request a 30-day extension from the Treasury Department. If governors do not nominate census tracts or request an extension, they essentially opt their state out of receiving these investments for the tax incentive’s entire ten-year authorization.
To assist states with these decisions, Enterprise has created a new tool to map Opportunity Zone eligibility by state, with the ability to add related information – including New Markets Tax Credit (NMTC) investments, CDBG projects, and Choice Neighborhoods – for each census tract. See Enterprise’s Opportunity Zones page for additional resources, stay tuned to the Enterprise blog for more Opportunity Zones information, and view a recording of a February 7 webinar that provides an overview of Opportunity Zones.