flexiblefullpage - default
Currently Reading

Opportunity Zones to Encourage Investment in Distressed Communities

billboard - default

Opportunity Zones to Encourage Investment in Distressed Communities

NAHB Housing Policy Briefing | The National Association of Home Builders is a Washington, D.C.-based trade association representing more than 140,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing, and other aspects of residential and light commercial construction. For more, visit nahb.org.

By National Association of Home Builders March 28, 2019
distressed property_opportunity zones_Tax Cuts and Jobs Act of 2017
Billions of dollars may soon flow into new investment tools designed to encourage economic growth in designated distressed communities. (Photo: Pixabay)
This article first appeared in the April 2019 issue of Pro Builder.

Investor interest in opportunity zones is growing, and some analysts believe that billions of dollars may soon be flowing into these new investment tools designed to encourage economic growth in designated distressed communities.

Opportunity zones, created as part of the Tax Cuts and Jobs Act of 2017, have the potential to reinvigorate troubled areas nationwide. Investments into an opportunity zone flow through a qualified opportunity fund (QOF), which can take the form of a corporation or partnership. In October 2018, the Treasury Department and IRS released proposed regulations intended to enable investing in opportunity zones and to clarify key questions regarding such investments. 

The National Association of Home Builders has asked the IRS to address in the final regulations issues related to project delays as well as the redevelopment of vacant or abandoned property.

The law provides two tax incentives for opportunity zone investments. First, it allows taxpayers to defer federal taxes on any capital gains resulting from a QOF investment. Over time, investors may be eligible to reduce federal taxes owed on the deferred capital gains. 

Second, the law excludes from gross income the post-acquisition gains on investments in QOFs that are held for at least 10 years. The proposed regulations also specify that only capital gains are eligible for tax deferral and potential exclusion from federal taxes; ordinary gains are not eligible. Additionally, the gain to be deferred must be one that would be recognized no later than December 31, 2026, the final date specified by the law.

Under the statute, a QOF is any investment vehicle organized as a corporation or partnership. It must hold at least 90 percent of its assets in qualified opportunity zone property, which includes qualified opportunity zone business property. 

The proposed regulations specify that for an enterprise to be considered a qualified opportunity zone business, it must (among other requirements) be one in which at least 70 percent of the tangible property owned or leased by the taxpayer is qualified opportunity zone property.

Final regulations on investing in opportunity zones are expected later in 2019.


NAHB April 2019_chart 1.pngNAHB April 2019_charts 2 and 3.pngNAHB April 2019_chart 4.png

  • This story originally appeared in the April 2019 issue of Professional Builder magazine. See the print version of this article here.
leaderboard2 - default

Related Stories

Government + Policy

Biden Administration Extends Federal Housing Financing Program

Funds from the program are used to develop or rehabilitate affordable rental homes, helping boost US housing supply


NAHB Advocacy Efforts and Outcomes

NAHB Policy Briefing: Advocacy efforts by the National Association of Home Builders are making a difference; analysis of 2021 American Housing Survey data


Democratic Senators Urge Federal Reserve to Cut Interest Rates in 2024

A group of Democratic senators is urging the Fed to do more and better on interest rates to ease the burden on American households struggling to afford housing

boombox1 -
native1 - default
halfpage2 -

More in Category

Delaware-based Schell Brothers, our 2023 Builder of the Year, brings a refreshing approach to delivering homes and measuring success with an overriding mission of happiness

NAHB Chairman's Message: In a challenging business environment for home builders, and with higher housing costs for families, the National Association of Home Builders is working to help home builders better meet the nation's housing needs

Sure there are challenges, but overall, Pro Builder's annual Housing Forecast Survey finds home builders are optimistic about the coming year

native2 - default
halfpage1 -

Create an account

By creating an account, you agree to Pro Builder's terms of service and privacy policy.

Daily Feed Newsletter

Get Pro Builder in your inbox

Each day, Pro Builder's editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Save the stories you care about

Lorem ipsum dolor sit amet lorem ipsum dolor sit amet lorem ipsum dolor sit amet.

The bookmark icon allows you to save any story to your account to read it later
Tap it once to save, and tap it again to unsave

It looks like you’re using an ad-blocker!

Pro Builder is an advertisting supported site and we noticed you have ad-blocking enabled in your browser. There are two ways you can keep reading:

Disable your ad-blocker
Disable now
Subscribe to Pro Builder
Already a member? Sign in
Become a Member

Subscribe to Pro Builder for unlimited access

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.