28 Aug 2019

The Opportunity Zone, Congress’ new incentive for real estate investors in California

The tax code incentivizes West Coast investors to allocate capital in ways that achieve desired social outcomes. Internal Revenue Code Section 1031 helps California businesses expand into more space and increase the capacity of investment properties. Section 1031 exchanges add to the supply of housing units, increase industrial capacity, upgrade properties into more energy-efficient offices, and increase the supply of real property held for investment or used in a business.

This new investment vehicle is called an Opportunity Zone, which has been formed to help reinvest and revitalize communities.

By Bill Angove, Special to California Business Journal

Congress has created a new incentive for investors to invest capital into distressed communities.

A new tax code section, IRC §1400, more commonly known as the Opportunity Zone (OZ) provision, provides tax incentives on deferred gains along with the potential for tax exclusion on new gains for assets held at least 10 years. Tax advantages are available to Colorado investors who allocate capital to a designated OZ by investing in an Opportunity Zone Fund (OZ Fund) in economically depressed areas. The areas in California have been identified for targeted tax benefits to attract new capital with the goal of revitalizing these low-income communities.

Read the full article here.