All About Opportunity Zones

Fifty-two million Americans live in economically distressed communities. These urban, rural, and suburban communities are located in every corner of the United States and its territories. Despite the growing national economy, these communities are plagued by high levels of poverty, failing schools, job scarcity, unsafe neighborhoods, and a lack of investment capital. In response, our historic Tax Cuts and Jobs Act included a powerful new tax incentive—Opportunity Zones—to spur economic development and job creation by encouraging long-term investment in low-income communities nationwide.

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Opportunity Zones Are More Than You Think

WHAT IS THE OPPORTUNITY ZONE PROGRAM? The increasingly globalized economy has meant prosperity for many, yet millions of Americans have been overlooked, devoid of the same benefits or the potential for upward mobility that comes from widespread investment. Fifty-two million Americans live in economically distressed communities, including the thirty-five million who reside in Opportunity Zones. A lack of investment has contributed to this economic distress, and a lack of access to economic opportunity can lead to negative outcomes in the vital measures that matter to all communities, including high unemployment rates, stagnant wages, low graduation rates, unsafe neighborhoods, and shorter life expectancy. To help these communities, Opportunity Zones were introduced in the Tax Cuts and Jobs Act, which President Donald J. Trump signed into law in December of 2017.

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Why Opportunity Zones?

The Opportunity Zone tax incentive provides a tremendous way to bring investments, jobs, business expansion, and new business development to your community. Qualified Opportunity Zones were created by the 2017 Tax Cuts and Jobs Act. These zones are designed to spur economic development and job creation in distressed communities throughout all 50 States, the District of Columbia, and the five U.S. territories by providing tax benefits to investors who invest eligible capital into these communities.

What Is An Opportunity Zone?

Opportunity Zones are economically distressed communities, defined by individual census tract, nominated by America’s governors, and certified by the U.S. Secretary of the Treasury via his delegation of that authority to the Internal Revenue Service. Under certain conditions, new investments in Opportunity Zones may be eligible for preferential tax treatment. There are 8,764 Opportunity Zones in the United States, many of which have experienced a lack of investment for decades. The Opportunity Zones initiative is not a top-down government program from Washington but an incentive to spur private and public investment in America’s underserved communities.

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Understanding The Deeper Why Behind The Opportunity Zone Program


Fifty-two million Americans live in economically distressed communities. These urban, rural, and suburban communities are located in every corner of the United States and its territories. Despite the growing national economy, these communities are plagued by high levels of poverty, failing schools, job scarcity, unsafe neighborhoods, and a lack of investment capital. In response, our historic Tax Cuts and Jobs Act included a powerful new tax incentive—Opportunity Zones—to spur economic development and job creation by encouraging long-term investment in low-income communities nationwide.


Opportunity Zones provide incentives for long-term private sector investment in economically distressed communities. State executives nominated census tracts to become Qualified Opportunity Zones to the U.S. Department of the Treasury, which then certified the tracts as Opportunity Zones.


The Opportunity Zone designation encourages investment in these census tracts by granting investors extensive Federal tax advantages for using their capital gains to finance new projects and enterprises (or substantially improve existing projects and enterprises) located within Qualified Opportunity Zones. There are more than 8,700 designated Qualified Opportunity Zones located in all 50 States, the District of Columbia, and five United States territories. Of these, approximately 40 percent are located in rural census tracts, 38 percent in urban census tracts, and 22 percent in suburban census tracts. Opportunity Zones represent significant investment opportunities. This is emphasized by the following facts:


  • Nearly 35 million Americans live in communities designated as Qualified Opportunity Zones;
  • Unemployment rates are 1.6 times higher in Opportunity Zone census tracts than the average United States census tract;
  • Median family incomes in Opportunity Zones are 37 percent lower than their respective area’s or State’s median;
  • The average poverty rate across Opportunity Zones is more than 32 percent, almost double the rate of approximately 17 percent for the average United States census tract;
  • One in four Opportunity Zones have a poverty rate over 40 percent, compared to one in 15 census tracts nationwide;
  • The homeownership rate in Opportunity Zones is approximately 15 percentage points lower than the national average;
  • Life expectancy is on average three years shorter for Opportunity Zone residents than it is nationally; and
  • Approximately 22 percent of Opportunity Zone adult residents have not attained a high school diploma, compared to 13 percent nationally.


The Opportunity Zones priority is to help the forgotten men and women of America—particularly those living in economically distressed communities—facing an uphill battle to opportunity. On average, the median family income in an Opportunity Zone is 37 percent below the State median. More than one in five Opportunity Zones have a poverty rate higher than 40 percent, compared to just one in twenty census tracts nationwide. Of all Opportunity Zones, 71 percent meet the U.S. Department of the Treasury’s definition of “severely distressed.” Approximately 22 percent of adults living in Opportunity Zones have not attained a high school diploma, compared to 13 percent nationally. Most striking is that life expectancy for Opportunity Zone residents is on average three years shorter than it is nationally.


In order to combat these staggering numbers, on December 12, 2018, President Donald J. Trump signed Executive Order 13853, establishing the White House Opportunity and Revitalization Council (Council). The Council is chaired by the Secretary of the U.S. Department of Housing and Urban Development, Benjamin S. Carson, Sr., and led by Executive Director Scott Turner. The Council carries out the Administration’s plan to encourage public and private investment in urban and economically distressed areas, including Opportunity Zones. In April of 2019, the Council published an Implementation Plan, which assigned Council member agencies to specific work streams and objectives.


The Council member agencies have proposed a total of 223 recommendations, which aim to encourage public and private investment in urban and economically distressed communities, including Opportunity Zones; and to help State, local, and tribal governments to better identify, use, and administer Federal resources in urban and economically distressed communities, including Opportunity Zones.

Opportunity Zones By The Numbers

Over a Million lives have already been impacted by Opportunity Zones

8700+

Designated Opportunity Zones

(Nationwide, Guam, Puerto Rico & US Virgin Islands)

2600+

Estimated Opportunity Funds Established To Date

New Opportunity Zone Funds Created In The Last 3.5 Years

$9+

Trillion In Unrealized Capital Gains

Amount of Unrealized Capital Gains in the US and growing each year.

$200+

Billion Already Invested Into Opportunity Zones

Have Already Been Reinvested In To Community Revitalization Because Of The Program

How Investors Benefit

The Opportunity Zone tax incentive will spur capital investment and economic development in low-income communities. First, investors can defer the taxation of certain prior gains invested in a Qualified Opportunity Fund (QOF) until the earlier of the date on which the investment in the QOF is sold or exchanged, or December 31, 2026. Second, if the QOF investment is held for at least 5 years, 10% of the gain that was originally deferred is eliminated completely. Third, if the investor holds the QOF investment at least ten years, when the investor sells or exchanges the investment, the investor is eligible to eliminate the gain on the QOF investment from any increase in value of the QOF investment during the investor’s holding period.

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INVESTOR SELLS ASSET FOR A CAPITAL GAIN

The investor sells some sort of asset that creates either a short term or long-term capital gain.

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180 DAY IDENTIFICATION PERIOD

From the day the qualifying asset is sold, the investor has 180 days to place the capital gained in a qualifying investment fund.

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DEFER CAPTIAL GAINS TAX UNTIL 2026

Taxes on initial capital gains taxes deferred are due on December 31st, 2026. They would also be due if the asset was sold previous to this date.

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CAPITAL GAINS ELIMINATED

If the investment into the opportunity zone fund is held for ten (10) years, all of the growth on the original capitals are tax free. You receive a full step up in basis to fair market value at time of exit.

Opportunity Zones. Focusing On Economic Development

Job Creation

The 30 million small businesses across the United States create two out of three net new jobs each year. These businesses serve as the engines that drive our economy, and their expansion into Opportunity Zones will uplift economically distressed areas by providing new investments, new jobs, and dynamic economic systems.

Community Revitalization

Through stronger businesses, communities are better equipped to withstand economic downturn and, in turn, protect those same investments. Targeted public investment in infrastructure, transportation, public spaces, and housing will help Opportunity Zones attract private capital to withstand periods of economic distress.

SPEAK WITH AN OPPORTUNITY ZONE ADVISOR TODAY

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How We Got Here

Breaking down the Opportunity Zone timeline. Puts the program into perspective.

1
2015 - 2016

The Birth Of The Opportunity Zone Program The idea of opportunity zones is drafted and details on how to get it passed thru congress was worked out with bi-partisan support from congress. The idea was drafted under the Obama Administration and picked up and finalized with the Trump Administration.

2
2017

The Opportunity Zone Program Is Signed Into Legislation By Congress and The President. Tax Cut & Jobs Act (TJCA) was officially passed into law on December 31st, 2017. The 900+ page bill included the initial language establishing the opportunity zone program.

3
2018

April The IRS issues the first opportunity zone press release to the public. Late June Official IRC guidance is released by the Internal Revenue Service. Thus pulling the trigger for the opportunity zone program to officially start across America. December 12th On December 12, 2018, President Donald J. Trump signed Executive Order 13853, which established the White House Opportunity and Revitalization Council (Council), to carry out the Administration’s plan to target, streamline, and coordinate Federal resources to be used in Opportunity Zones and other economically distressed communities.

4
2019

January GOVERNMENT SHUT DOWN delays 1st tranche of guidance being released to the public. April Tranche 1 guidance officially released. (500+ pages) Primarily focused on answering the questions around real estate usage from developers. Established the 31 month working capital safe harbor provisions for real estate assets. December 19th Tranche 2 guidance officially released. (500+ pages) Primarily focused on answering the questions around business usage from startups and zone businesses. Established the 60 month working capital safe harbor provisions for qualified opportunity zone businesses. December 31st 5% additional step up in basis on the tax due on the deferred capital gains expires for investors.

5
2020

January President Trump talks about Opportunity Zones during the State Of the Union Address. Specifically mentioning an opportunity zone business. January - March Opportunity Now events were happening across the country promoting Opportunity Zones by the Whitehouse, Hud & SBA March-April Covid-19 hits the world as a global pandemic. Causing a massive shutdown across the country. Forcing the entire focus of the government to shift away from opportunity zones. Massive stock market exit creates $700B in new capital gains. 65+ million American’s unemployed. Massive business shutdowns. November Whitehouse releases an official announcement. $75+Billion has been invested into opportunity zones. Over 1 Million people impacted so far. Additionally, the Community Reinvestment Act guidance was updated to reflect CDFI tracks and Opportunity Zones for purposes of the CRA credits for banking institutions. December Several announcements were made by the SEC in regards to Crowd Fundraising, who has to register as a broker dealer, new accredited investor thresholds were released and changes to the Volker rule all have behind the scenes positive impact on opportunity zones and funds.

6
2021

Change in US President President Biden acknowledges keeping the Opportunity Zone program but wants enhanced reporting requirements March A 2 year extension bill on the tax deferment due date is introduced in Congress to extend to 2028 vs 2026. Additionally, new Census data was updated and is showing changes in extensions to designated opportunity zones. We are currently waiting on additional guidance on how this will impact the opportunity zone program. March 31st Program Extensions due to Covid19 expired for investors with capital gains dating back to 2019. December 31st 10% Step up in basis for capital gain investors investing in opportunity funds expires.

7
2022

May - Congress announces new Opportunity Zone legislation with bipartisan support.

Multiple Federal Agencies Support The Opportunity Zone Program In Various Way.

The Full Weight Of The US Government Supports Opportunity Zones

On December 12, 2018, President Donald J. Trump signed Executive Order 13853, which established the White House Opportunity and Revitalization Council (Council), to carry out the Administration’s plan to target, streamline, and coordinate Federal resources to be used in Opportunity Zones and other economically distressed communities. With fifty-two million Americans living in economically distressed communities, including thirty-five million in Opportunity Zones, the Council’s work is indicative of this Administration’s commitment to the forgotten men and women of America.


The Council—comprised of 17 Federal agencies and Federal-State partnerships—is meant to identify and disseminate best practices for utilizing the Opportunity Zones tax incentive and existing Federal resources to stimulate economic growth and revitalization, especially in America’s distressed areas. This public sector commitment overlays the Opportunity Zones tax incentive (created through the Tax Cuts and Jobs Act), which itself encourages long-term private capital investment in economically distressed communities. Together, private capital and public investment will stimulate economic opportunity, encourage entrepreneurship, expand educational opportunities, develop and rehabilitate quality housing stock, promote workforce development, as well as promote safety and prevent crime in economically distressed communities.

Agencies Involved In Supporting Opportunity Zones

22 Federal Agencies Support The Opportunity Zone Program In Over 400 Agency By Agency Level Additional Grant Programs & Incentives

A Timeline Designed For Maximum Community Redevelopment

Very Simply Put…Investors have the next 16 years to place capital gains into opportunity zone funds. And the next 26 years to grow 100% TAX FREE!

1
2017

TCJA Establishes Program

2
2026

Deferred Capital Gains Tax Due

3
2037

Last Date An Investor Can Invest

4
2047

Opportunity Zone Program Expires

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