Criticism that opportunity zone tax breaks will benefit well-heeled developers and investors at the expense of low-income residents has been heard by the federal government. The Treasury Department issued a seven-page notice April 16 asking stakeholders to suggest how to measure the community impact from opportunity zone investments.
The Tax Cuts and Jobs Act of 2017 created opportunity zones to revitalize economically distressed communities by encouraging investment through tax breaks. Investors can defer paying taxes on their capital gains from any venture by putting the money into a qualified opportunity zone fund.
The fund, through a fund manager, seeks eligible real estate and business projects in the 8,750 opportunity zones across the U.S. The amount of a tax break depends on how long investors keep money in the opportunity zone fund. Fieldstone said some of the tracking requirements the federal government could impose would record the number of new jobs created in an opportunity zone as well as the amount and types of community benefits, such as job training, infrastructure work and new affordable housing. Despite the gentrification criticism, the opportunity zone law still is good news for these areas, added Hadjilogiou.