Tax incentives designed to fuel investments into low-income Opportunity Zones across the U.S. appear to be doing just that, according to new data from Zillow.
The Opportunity Zones program, launched via the Tax Cuts and Jobs Act of 2017, gives investors in 8,700 of the designated Opportunity Zones benefits like capital-gains tax deferment and tax-free growth for a number of years. Initial returns are promising as sales prices for homes in Opportunity Zones rose more than 20 percent from 2018 to 2019.
In comparison, homes in census tracts that were eligible but not chosen as Opportunity Zones have seen an annual slowdown in sales-price appreciation. It’s important to note that the Opportunity Zones program remains in its formative stages, with many rules governing the zones themselves still up in the air.
It’s also crucial to consider that Opportunity Zones may not be created equally, as no regulations exist that say investments must be spread evenly across all zones nationwide. Opportunity Zones within Boston’s metropolitan area have the highest average rank in the study, while Massachusetts has the highest statewide average rank.