What are Opportunity Zones?
Opportunity Zones are census tracts designated by state and federal governments for a new economic development initiative that will remain in place for 10 years. The 2017 Tax Cut and Jobs Act created this incentive to direct investment into disadvantaged communities and neighborhoods. It provides tax benefits to holders of capital gains if they invest return in the designated zones.
What is an Opportunity Fund?
A new class of private sector investment vehicles authorized to aggregate and deploy private investment into Opportunity Zones. Opportunity Funds allow U.S. investors holding unrealized gains in stocks and mutual funds to pool their resources in projects located in Opportunity Zones. Opportunity Funds pool investments into rebuilding low-income communities (Opportunity Zones) and are eligible to receive:
- A Temporary Deferral - Defer the payment of your capital gains until December 31, 2026.
- A Reduction - Reduce the tax you owe by up to 15% after 7 years.
- An Exemption - Pay zero tax on gains earned from the Opportunity Fund investment.
The City of Cambridge has numerous tracts designated as "Federal Opportunity Zones."
- Industrial Development / Redevelopment
- Multi-Family Development
- Commercial Retail Development / Redevelopment
Opportunity Zone Sites
- Downtown Cambridge - includes properties South of State Highway 95 downtown Cambridge. Investment opportunity for potential hobby/craft store, mixed use development or affordable housing.
- Southeast Industrial Park - includes properties South of State Highway 95. Investment opportunity in multiple sites for Industrial Development.
- Opportunity Industrial Park - Includes properties South of State Highway 95. Investment opportunity in multiple sites for affordable housing, commercial retail, potential convenience store or Hotel development.
For More Information
Economic Development Director
The U.S. Treasury Department released its first guidance for the Opportunity Zones tax incentive on October 19, 2018. That guidance includes 74 pages of proposed regulations, a five page revenue ruling, an updated Q&A document and both a draft of Form 8996 for qualified opportunity funds and instructions for that form. The U.S. Treasury Department also alerted the public that we should expect some additional guidance for Opportunity Zones later this year. See the U.S. Treasury Department press release. Taxpayers may submit comments electronically via the Federal Rulemaking Portal (IRS REG-115420-18) before January 10, 2019. Additionally, a public hearing about the proposed rules has been scheduled for January 10, 2019.
- Department of Treasury letter to Governor Dayton, February 8, 2018
- Economic Development in the New Tax Law - Opportunities and Concerns by Economic Innovation Group
- Form 8949 (draft) and Instructions
- International Economic Development Council
- IRS Opportunity Zone Frequently Asked Questions
- Opportunity Zones Resources - Department of Treasury, Community Development Financial Institutions Fund
- Revenue Procedure - Designation of Opportunity Zones
- Revenue Ruling: 26 USC 1400Z-2 - Special Rules for Capital Gains Invested in Opportunity Zones