Opportunity Zones - Investor Tax Incentives

The Opportunity Zone Program is becoming more and more popular in South Florida. Florida has 427 designated Opportunity Zones, 68 of them are in Miami Dade County. Areas include: Liberty City, Opa-Locka, Carol City, Little Haiti, North Miami and Aventura. See map above. The program provides tax incentives to developers who build in these areas.

An Opportunity Zone is an economically - distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation authority to the Internal Revenue Service.

Opportunity Zones are designed to spur economic development by providing tax benefits to investors. First, investors can defer tax on any prior gains until the earlier of the date on which an investment is sold or exchanged, or December 31, 2026, so long as the gain is reinvested in a Qualified Opportunity Fund. Second, if the investor holds the investment in the Opportunity Fund for at least ten years, the investor would be eligible for an increase in basis equal to the fair market value of the investment on the date that the investment is sold or exchanged.

To become a Qualified Opportunity Fund, an eligible taxpayer self certifies.  (Thus, no approval or action by the IRS is required.)  To self-certify, a taxpayer merely completes a form and attaches that form to the taxpayer’s federal income tax return for the taxable year. 

Over the next few months, the Treasury Department and the Internal Revenue Service will be providing further details, including additional legal guidance, on this new incentive. More information will be available at Treasury.gov and IRS.gov.