Anticipation is growing about the promise of the so-called Opportunity Zone program created under The Tax Cuts and Jobs Act, signed into law Dec 22, 2017. Many developers, designers, and construction professionals are trying to understand their role in the new Program. Dominick wrote about the potential of the Opportunity Zone Program for Construction Executive in the article titled, "How the Construction Industry Can Take Advantage of Opportunity Zones."
"The Opportunity Zone program creates opportunities and potential challenges for members of the construction industry. Contractors and design professionals are strongly advised to think about the impacts of the program if they participate in projects subject to the program’s rules. Among other things, the Act requires Opportunity Zone projects to be to be “substantially improved,” creating opportunities for builders to bid on and win projects in new areas. However, with some exceptions, the projects must be substantially improved in a specific period of time, creating potential for owners to shift the risk of not completing a project in the period of time to the general contractors.
In short, the Act allows a taxpayer to elect to defer taxes on the gains from property sold in 2018 and later by investing the gains in a Qualified Opportunity Fund. A fund is a private investment vehicle, which is treated as either a corporation or partnership for federal income tax purposes. A fund must be created solely for investing and holding its assets in Qualified Opportunity Zone Property. The fund must hold at least 90 percent of its assets in Zone Property, which includes Qualified Opportunity Zone Stock, Qualified Opportunity Zone Partnership Interests and Qualified Opportunity Zone Business Property."
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