The Opportunity Zone Program was created through the Tax Cuts and Jobs Act of 2017. It offers incentives—in the form of capital gains tax abatement—to investors in Qualified Opportunity Zone (QOZ) assets via Qualified Opportunity Funds (QOF). The Act created 8,764 QOZs in the 50 states and U.S. regions that consist of low- income census tracts deemed economically distressed. The census tracts were chosen by the CEOs of the states and U.S. regions to spur private investment in economically distressed QOZs. The program provides three potential tax benefits. First, the income tax on previously earned capital gains invested in QOZs is deferred until the earlier of either the investment being sold/exchanged or Dec. 31, 2026. For investments held for at least five years in a QOZ, investors’ original investment basis raises 10%; 15% if held for seven years. Finally, for investments held for at least 10 years, investors pay no taxes on capital gains generated from their investment.

• Publication date: March 2020