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February 14, 2019

Looking to Invest in Qualified Opportunity Zones? (article)

Adapted from Bisnow National CRE News, 12/9/2018

As investors across the nation seek to deploy billions of dollars in capital gains into Qualified Opportunity Zones (QOZs), they are actively seeking guidance about the program and on the hunt for resources to help identify neighborhoods, assets and available land within opportunity zones most ripe for investment. 

The program, created through the passing of the Tax Cuts and Jobs Act, aims to incentivize private investment in underserved and otherwise blighted communities across the U.S. in exchange for a hefty tax break. More than 8,700 census tracts have been classified as opportunity zones, and numerous opportunity zone funds have already launched to take advantage of the program – with an estimated $6 trillion in unrealized capital gains eligible to be deployed into opportunity zones, according to a study conducted by Real Capital Analytics

In response to high demand from firms and high net worth individuals interested in the QOZ program, a number of tools have come to market to help potential investors understand how the program works, identify neighborhoods that qualify for it and locate assets within the designated areas in need of investment.

"Opportunity zones have brought national attention to areas of the country that have been too often looked over for investment. Unlike traditional community development institutions, knowledge and understanding about these communities is quite limited,” Smart Growth America’s Vice President of Land Use and Development Christopher Coes told Bisnow. Coes is also director of national real estate developer and investor network LOCUS

“The structure of the opportunity zones tax incentive places the onus on the investor to identify and conduct due diligence which requires an understanding of not only the project but also the place. Because of this demand, we're seeing a lot of tools [come to market] to help assist investors and policymakers.”

The list of designated QOZs in which a Fund may invest to meet its investment requirements can be found at IRS Notice 2018-48.

Additional Resources

List of Qualified Opportunity Zones (IRS Notice 2018-48)

Additionally, Bisnow provided resource sites in its December 9 newsletter, including:

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