The Opportunity Zone Program is a federally-established, program to provide investment incentives for certain census tracts. This is a tool to encourage growth in low income communities.
The recently passed U.S. Tax Cut and Jobs Act of 2017 created the Opportunity Zone Program to provide incentives for investment in low income communities throughout the country. According to the IRS, an Opportunity Zone is an economically-distressed community area where new investments may be eligible for preferential tax treatment. Community areas qualify as Opportunity Zones if they have been nominated by the state and certified by the U.S. Treasury. Opportunity Zones must be created within low-income communities as defined by Section 45D(e) of the Internal Revenue Code—census tracts with a poverty rate of at least 20 percent or where the median family income does not exceed 80 percent of statewide median income. A maximum of 25 percent of a state’s low-income census tracts may be designated as Opportunity Zones.
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The City of New Bedford in 2018 received notification from the Governor that four census tracts in New Bedford were approved as Opportunity Zones. Those census tracts are (identified by the last four digits): 6512, 6513, 6518 and 6519.
See the map below for a look at the four census tracts in the City of New Bedford that received Opportunity Zone designations.
The City of New Bedford has developed a factsheet with key information on New Bedford’s economy and economic development.
FREQUENTLY ASKED QUESTIONS (FAQs)
What are Opportunity Zones?
Opportunity Zones are low income census tracts nominated by governors and certified by the U.S. Department of the Treasury into which investors can now put capital to work financing new real estate projects and enterprises in exchange for certain federal capital gains tax advantages. The country now has over 8,700 Opportunity Zones in every state and territory. There are thousands of qualifying commercial properties within these zones.
What are Opportunity Funds?
Opportunity Funds are private sector investment vehicles that invest at least 90 percent of their capital in real estate and / or businesses within the Opportunity Zones. U.S. investors currently hold trillions of dollars in unrealized capital gains in stocks and mutual funds alone – a significant untapped resource for economic development. Opportunity Funds provide investors the change to put that money to work rebuilding the nation’s left-behind communities. The fund model will enable a broad array of investors to pool their resources in Opportunity Zones, increasing the scale of real estate investments going to underserved areas.
What are the incentives that encourage long-term investment in eligible areas?
The Opportunity Zones program offers investors the following incentives for putting their capital to work in low-income communities: (CONTINUED ON PAGE)
While rulemaking is ongoing, the following links provide more information on how Opportunity Zone investments work, potential tax implications, and where other eligible tracts are located:
- Opportunity Zones Frequently Asked Questions from the IRS
- Opportunity Zones Resources from the U.S. Department of the Treasury
- “Opportunity Zones: A New Incentive for Investing in Low-Income Communities” from the Economic Innovation Group