Federal Qualified Opportunity Zones October 10 2018 FALL CONFERENCE 2018 Federal Opportunity Zones Background SEC 13823 OPPORTUNITY ZONES a In GeneralChapter 1 is amended by adding at the end the following ID: 795880
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GEORGIA DEPARTMENT OF COMMUNITY AFFAIRS ______________________________
Federal Qualified Opportunity Zones
October 10, 2018
FALL CONFERENCE 2018
Slide2Federal Opportunity Zones - BackgroundSEC. 13823. OPPORTUNITY ZONES.(a) In General.--Chapter 1 is amended by adding at the end the following: ``Subchapter <<NOTE: 26 USC prec. 1400Z-1.>> Z--Opportunity Zones ``Sec. 1400Z-1. Designation. ``Sec. 1400Z-2. Special rules for capital gains invested in opportunity zones. ``SEC. 1400Z-1. <<NOTE: 26 USC 1400Z-1.>> DESIGNATION. ``(a) Qualified Opportunity Zone Defined.--For the purposes of this subchapter, the term `qualified opportunity zone' means a population census tract that is a low-income community that is designated as a qualified opportunity zone. ``(b) Designation.-- ``(1) In general.--For purposes of subsection (a), a population census tract that is a low-income community is designated as a qualified opportunity zone if-- ``(A) not later than the end of the determination period, the chief executive officer of the State in which the tract is located-- ``(i) nominates the tract for designation as a qualified opportunity zone, and ``(ii) notifies the Secretary in writing of such nomination, and ``(B) the Secretary certifies such nomination and designates such tract as a qualified opportunity zone before the end of the consideration period. ``(2) Extension of periods.--A chief executive officer of a State may request that …..The Tax Cuts and Jobs Act of 2017 created Federal Opportunity Zones
Tax benefit to incent long-term equity investments
Connect low-income communities withcapital
Slide3What are Federal Opportunity Zones?Low-income community census tracts designated for investments25% of State’s low-income community census tracts were eligible for designationGovernor Deal approved 260 recommended census tracts that were approved by Treasury in March 2018Designation as Federal Qualified Opportunity Zones lasts for 10 years.
Slide4Incentives for Investors - OverviewTemporary Deferral on Capital GainsReduction in Capital Gains LiabilityTax Exemption on Gains of Opportunity Fund
Slide5Investor Incentive - TimelineYear 1: Capital Gain is InvestedYear 5: 10% Step-Up in BasisYear 7: 5% Additional Step-Up in Basis12/31/26: Tax on Deferred Gain is DueYear 10: No Tax on Post Acquisition Appreciation
Slide6What are Opportunity Funds?Investment vehicles organized as corporations or partnershipsFlexible structureSelf certified (Subject to further Treasury guidance)Must invest 90% of their assets in federal qualified opportunity zone property
Slide7Types of Opportunity FundsNational or LocalSpecialized or DiversifiedClosely-held or Professionally ManagedSingle Project or Portfolio of Projects
Slide8What is Qualified Opportunity Zone Property?Three types of eligible investments:Stock of a qualified opportunity zone corporationPartnership interest in a qualified opportunity zone partnershipBusiness property used in a qualified opportunity zone
Slide9Diversity of InvestmentsBusiness VenturesAffordable Housing ProjectsCommercial Development
Slide10Going Forward260 Zones Certified in GeorgiaDCA website https://dca.ga.gov/community-economic-developmentFederal Opportunity Zone Meeting in AtlantaOctober 30, The Loudermilk Center, 7:00 a.m. – 11:45 a.m.Further guidance from IRS/Treasury – Q4 of 2018?2019 – Opportunity Funds Establish and Investments Flow2020 + 2021 – Funds Reach 90% Thresholds
Slide11General Thoughts on Federal Opportunity ZonesComments and Questions
Slide12Holly Hunt, FOZ Coordinator(404) 679-3144holly.hunt@dca.ga.gov FederalOZ@dca.ga.govwww.dca.ga.gov
Community & Economic DevelopmentFederal Qualified Opportunity Zones
Contact information
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