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    Opportunity Zones Summary

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    sawilson1
    The Opportunity Zone program provides tax incentives for investors to invest capital gains into designated distressed areas known as Opportunity Zones. Taxpayers can defer capital gains taxes by investing in a Qualified Opportunity Fund within 180 days of realizing the gain. Depending on how long the investment is held, capital gains taxes may be reduced by up to 15% if held for over 7 years. There are 82 Opportunity Zones designated in Philadelphia that meet federal criteria for economic distress. This program does not include any additional state or local subsidies.

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    Opportunity Zones Summary

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    sawilson1
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    The Opportunity Zone program provides tax incentives for investors to invest capital gains into designated distressed areas known as Opportunity Zones. Taxpayers can defer capital gains taxes by investing in a Qualified Opportunity Fund within 180 days of realizing the gain. Depending on how long the investment is held, capital gains taxes may be reduced by up to 15% if held for over 7 years. There are 82 Opportunity Zones designated in Philadelphia that meet federal criteria for economic distress. This program does not include any additional state or local subsidies.

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    The Opportunity Zone program provides tax incentives for investors to invest capital gains into designated distressed areas known as Opportunity Zones. Taxpayers can defer capital gains taxes by investing in a Qualified Opportunity Fund within 180 days of realizing the gain. Depending on how long the investment is held, capital gains taxes may be reduced by up to 15% if held for over 7 years. There are 82 Opportunity Zones designated in Philadelphia that meet federal criteria for economic distress. This program does not include any additional state or local subsidies.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    45 views2 pages

    Opportunity Zones Summary

    Uploaded by

    sawilson1
    The Opportunity Zone program provides tax incentives for investors to invest capital gains into designated distressed areas known as Opportunity Zones. Taxpayers can defer capital gains taxes by investing in a Qualified Opportunity Fund within 180 days of realizing the gain. Depending on how long the investment is held, capital gains taxes may be reduced by up to 15% if held for over 7 years. There are 82 Opportunity Zones designated in Philadelphia that meet federal criteria for economic distress. This program does not include any additional state or local subsidies.

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    Opportunity Zones

    A New Federal Tax Incentive for Development

    The Opportunity Zone program is a federal tax incentive created as part of the 2018 Tax Cuts & Jobs Act. It
    provides a tax cut on capital gains for entities that invest in Opportunity Zones. Taxpayers who make qualifying
    opportunity zone investments can defer and potentially reduce their capital gains taxes.
    Opportunity Zones are distressed census tracts that meet standards set by the federal government. Governors
    in each of the fifty states selected the zones for their state. There are 82 zones in Philadelphia.
    This program does not include any state or local subsidies.

    HOW THE TAX INCENTIVES WORK: FOR EXAMPLE:


    A taxpayer sells an asset and realizes a capital gain. They Phyllis sells an investment for a gain of $100,000 in 2018.
    can defer and possibly reduce the capital gains tax on She then invests that $100,000 in a QOF within 180 days
    that gain by investing it in a “Qualified Opportunity of the sale.
    Fund” (“QOF”) within 180 days of their realized gain. • If Phyllis sells her QOF investment within 5 years,
    she pays capital gains taxes on $100,000.
    By investing the capital gain in a QOF, the taxpayer does
    • If Phyllis sells her QOF investment after 5 years, she
    not have to pay capital gains tax on it until they sell
    pays capital gains taxes on only $90,000.
    the QOF investment or in 2026, whichever is sooner.
    • If Phyllis sells her QOF investment after 7 years, she
    The amount of capital gains tax owed on the sale of their pays capital gains taxes on only $85,000.
    original asset can be reduced by:
    • 10 percent if they hold onto their QOF investment • At the end of 2026, Phyllis must pay all taxes due
    for 5 years on the deferred gain, even if she still owns the QOF
    investment.
    • 15 percent if they hold onto their QOF investment
    for 7 years If Phyllis keeps her QOF investment for at least 10 years,
    she will not pay any capital gains tax on any gain she
    If the taxpayer holds their QOF investment for 10 years realizes upon selling her QOF investment.
    or more, they also will not pay capital gains tax on any
    new gain realized on the sale of their QOF investment.

    OTHER IMPORTANT NOTES:


    • Qualified property may include real estate development (new construction or renovations), new businesses, or
    expansions
    • A fund is eligible to become or remain a QOF if 90 percent of their capital is in a qualifying opportunity zone property
    or businesses.
    • Only property purchased after December 31, 2017 by an ‘unrelated party’ can qualify as a QOF.
    • For real estate to qualify, the qualifying use of that property must begin with the purchase by the QOF, or the new
    owner must significantly improve the property. (The IRS’s proposed regulations would require an improvement
    worth as much as the purchased property itself.)
    • A taxpayer may invest any part of a realized gain in a QOF and apply the tax benefits to that part.

    See other side for a map of Philadelphia’s Opportunity Zones.


    Philadelphia’s Opportunity Zones

    Philadelphia has experienced 11 straight years of population growth and its job numbers are currently at a
    30-year high. At the same time, Philadelphia’s cost of living remains significantly lower than its peer northeast
    cities. Philadelphia delivers the opportunity for additional growth and value creation that investors are seeking.

    LIVABILITY

    See other side for an explanation of the Opportunity Zone tax incentives.

    Department of Planning and Development


    [email protected]
    215-683-4686

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