The act established the framework for a new program – opportunity zones – aimed at updating the nation’s tax code to unlock the reinvestment potential of capital gains and direct that capital to the communities that need it most.
“Colorado has earned national recognition for our thoughtful and inclusive approach designating opportunity zones, and we are committed to ensuring that we realize the maximum potential,” Gov. Jared Polis said in a February statement announcing the formation of the state’s opportunity zone office. More information Will Opportunity Zones help distressed residents or be a tax cut for gentrification?, from the Brookings Institute. Opportunity zones are also not the first or only program designed to incentivize reinvestment of capital gains.
“We have been getting more and more questions every week, and as the months go by about opportunity zones, what are they, and how they can work with a 1031 exchange,” Julie Baird, vice president and western regional manager for First American Exchange Co., said during a panel on opportunity zones during BizWest’s recent Northern Colorado Real Estate Summit.
One of the main differences between opportunity-zone investments and 1031 exchanges, Baird said, is the fact that opportunity zones involve “a community aspect a bigger community feel to it.” The goal of the program is slightly loftier than simply providing incentives to reinvest gains.
Opportunity zones in the Boulder Valley and Northern Colorado include 11 areas that range from a distressed shopping center in Boulder to an area north of the University of Northern Colorado in Greeley.