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Treasury Issues New Guidance on Opportunity Zones

By Dennis Kaiser

The U.S. Department of the Treasury on Wednesday issued its second set of proposed regulations related to the new Opportunity Zones tax incentive that was created by the 2017 Tax Cuts and Jobs Act. A first set of guidance on Opportunity Zones was released in October, which was largely geared to provide investors with details about how to set up business arrangements in the zones.

The latest guidance on the tax benefit promises to make it easier for funds to ensure compliance with the requirement that a fund has 90% of its assets invested in Opportunity Zones and expands the working capital safe harbors. The proposed regulations also provide clarity on treatment of gains on long-term investments, ownership and operation of the business, and what constitutes Qualified Opportunity Zone Business Property.

The White House hosted an Opportunity Zone Conference on Wednesday for state and local government officials. President Donald J. Trump, Treasury Secretary Steven T. Mnuchin and Housing and Urban Development Secretary Ben Carson shared insights about the impact and promise of the tax incentive.

President Trump called the Opportunity Zone program “a crucial part of our new tax law to help low-income Americans” by providing “businesses a massive incentive to invest and create jobs in our nation’s most underserved communities.”

He went on to say, “Across the country, our tax cuts have kicked off a race to invest in Opportunity Zones beyond anything that anybody in this room even thought. In counties with heavy concentration of Opportunity Zones, wages have risen by now — it seems that we were talking about 8%, but it looks like it’s going to be a much higher number than that.

“Property sale prices in Opportunity Zones, if you have a home, have already skyrocketed by more than 20%. Secretary Mnuchin estimates that private businesses will invest $100 billion in Opportunity Zones, and that’s going to be in a fairly short period of time,” said Trump.

Key parts of the latest guidance indicate that a fund doesn’t have to take assets into account for purposes of the requirement unless the assets have been in the fund for at least six months. Additionally, Treasury officials say, if a fund sells an asset, it has up to 12 months to reinvest in a new appropriate investment.

Another update proposed pertains to individuals and businesses that invest in opportunity funds. Someone could invest by either directly investing in the fund or by purchasing an interest in the fund from an existing investor.

Another clarification pertains to the length of time required. The rules provide that if an investor has held an investment in an Opportunity Zone fund for at least 10 years and the fund sells an asset, the gain from the sale of the asset is tax-free to the investor, according to Treasury officials.

The Treasury is seeking comments about how to best measure the economic impact taking place in the Opportunity Zones.

President Trump concluded his remarks saying, “At the heart of Opportunity Zones is a belief that every American community is worth cherishing, protecting, and renewing. From rural towns to inner cities, we want to build new schools and factories, new roads and bridges, new hospitals and parks. And that’s what’s happening all over. We want to see loving homes, safe neighborhoods, and a gleaming Main Street. And above all, we want every family to have the opportunity to live their great American Dream.”

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For comments, questions or concerns, please contact Dennis Kaiser


Inside The Story

Read more at Full U.S. Treasury GuidanceConnect With President Trump

About Dennis Kaiser

Dennis Kaiser is Vice President of Content and Public Relations for Connect Commercial Real Estate. Dennis is a communications leader with more than 30 years of experience including as a journalist and in corporate and agency marketing communications roles. He is responsible for Connect’s client content operations and is involved in a range of initiatives ranging from content strategy, message development, copywriting, media relations, social media and content marketing services. In his most recent corporate communications roles, he led a regional public relations effort across Southern California for CBRE, played a key marketing role on JLL’s national retail team, and was responsible for directing the global public relations effort at ValleyCrest, the nation’s largest commercial landscape services company. In addition to his vast commercial real estate experience, Dennis has worked on communications and launch strategies for a number of residential projects such as Disney’s Celebration in Florida, Ritter Ranch in Palmdale California (7,200 homes, 22,000 acres), WaterColor in Florida and PremierGarage in Phoenix. Dennis’s agency background included firms such as Idea Hall and Macy + Associates. He has earned an outstanding reputation with organization leaders as a trusted advisor, strategic program implementer, consensus builder and exceptional collaborator. Dennis has developed and managed national communications programs for Fortune 500 companies to start-ups, both public and private. He’s successfully worked with journalists across the globe representing clients involved in major-breaking news stories, product launches, media tours, and company news announcements. Dennis has been involved in a host of charitable and community organizations including the American Cancer Society, Easter Seals, BoyScouts, Chrysalis Foundation, Freedom For Life, HOLA, L.A.’s BEST, Reach Out and Read, Super Bowl Host Committee, and Thunderbirds Charities.

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