Article by R. Michael N'dolo, Camoin Associates In previous editions of the Navigator, Camoin Associates…
In December of 2017, when President Trump’s thousand-page Tax Cuts and Jobs Act went into effect, it included a short, unassuming piece of bipartisan legislation that quietly flew under the radar.
It was no surprise that the Investing in Opportunity Act didn’t receive much attention, initially, surfacing at a time when the nation was gripped by more intriguing political news. But now, over a year later, it is finally receiving the buzz it deserves.
The Opportunity Zone program offers generous tax advantages that some experts project will deliver enormous benefits to private-sector investors, and promising economic growth potential for low-income communities.
Using investment vehicles called Opportunity Funds, investors can defer capital gains tax for up to ten years—and potentially eliminate capital gains tax altogether. The key will be to reinvest capital gains, which are profits accrued from the sale of an investment, into certain qualified census tracts, which are now designated by the United States Treasury as Opportunity Zones.
The proposed legislation emerged in 2017 out of a collaboration between South Carolina Republican Senator Tim Scott and New Jersey Democratic Senator Cory Booker. Both represent hard-hit urban and rural districts in their respective states, and both wanted to find a way to bring private sector dollars into these distressed communities, noting they have been largely overlooked since the country’s recovery from the Great Recession.
Source: Forbes, January 14, 2019