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Will Opportunity Zones Accelerate Gentrification or Spur Critical Investment in Distressed Areas?

April 2019 - Construction Executive
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Since the enactment of the Tax Cuts and Jobs Act of 2017, the real estate development community has been abuzz about the potential boost provided by the opportunity zone tax benefits introduced in the act. Put simply, opportunity zones are a tax benefit permitting investors to defer (and partially eliminate) capital gains tax by investing gains realized from the sale of property into a qualified opportunity fund (QOF), which in turn must contribute those investments into businesses or development projects located in qualified opportunity zones. Opportunity zones are designated by each state, and the majority must be in low-income communities as that term is defined in the tax code.

Opportunity zones inevitably will spur some increased investment in distressed communities. More than 100 QOFs have been created—with many more on the way—and a recent study estimated a potential $6 trillion available for investment in opportunity zones. That being said, at this early stage it’s difficult to project the true scale of investment and the resulting impact on the opportunity zone neighborhoods.

With so much capital being assembled to invest, will opportunity zone investment truly be a game changer for distressed communities or accelerate gentrification?

Read the article here.

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