A prominent feature of 2017’s Tax Cuts and Jobs Act was a provision to encourage community development, known as Opportunity Zones.

The Federal Tax Cuts and Jobs Act of 2017 introduced an impactful feature known as Opportunity Zones, which were created to encourage positive community development. These designated zones — scattered across the nation — present unique opportunities for economic growth and societal benefits through construction or redevelopment initiatives.

The program offers compelling prospects for businesses, real estate developers, and investors alike:

  • Developers can establish a fund for qualified projects can attract third-party investment capital, amplifying project potential.

  • Passive Investors can reinvest unrealized capital gains into Opportunity Funds dedicated to these zones opens avenues for strategic investments.

  • Businesses may use the program for cost-effective relocation to commercial spaces or expansion of employee pools

Two hands pulling aside wood panels to revel the word 'opportunity' — What is an Opportunity Zone? The Cherrytree Group assists both developers and investors in identifying and managing Opportunity Zone initiatives.

Developers can utilize these funds to defer taxes on capital asset sales. For instance, by channeling capital gains from asset sales into a fund for eight years, incorporating basis increase and a present value discount, they could reduce tax liabilities to 57% of the original amount.

Similarly, investors benefit from deferred tax payments on gains for up to eight years, with potential tax-free appreciation if the investment remains in the Opportunity Fund for at least a decade.

Within the astute investment community the program is considered quite generous; one of the better tax-reducing efforts put forth by our government in years. Like tax credits for historic rehabilitation, toxic land clean-up, development of affordable housing, and the creation of renewable energy, the program is an example of how developers and investors can contribute to the betterment of all while being allowed to profit for those efforts.

The Cherrytree Group assists both developers and investors in identifying and managing Opportunity Zone initiatives. We are able to “pair together” both the developer and the investor for a partnership which helps both meet their most optimistic goals. To learn more, click the link below to our White Paper on the subject, or give us a call where we will discuss the possibilities — without any obligation.

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