Opportunity Zones

The Opportunity Zones program offers tax incentives to investors, allowing for the use of realized capital gains to reinvest those dollars in underserved communities across the U.S. The events of the last few years, along with updated guidance, have led to renewed interest in the benefits offered by this program.

At the program’s inception, the tax incentives provided investors with an opportunity to defer recognition of gains on sales of assets, permanently reduce a portion of the deferred gain to be recognized, and permanently exempt any future gain with respect to reinvested proceeds. This occurs by reinvesting the gain in a Qualified Opportunity Fund (“QOF”), an investment vehicle specifically focused on making investments in Qualified Opportunity Zone (“QOZ”) businesses and/or property, allowing for greater diversification than other tax deferral mechanisms. Certain aspects of the program expired in December 2021, however, there are still some advantages to keep in mind.