Established by H.R.1 – The Tax Cuts and Jobs Act of 2017, the Opportunity Zones program encourages qualified investors to engage in long-term investments in low-income communities throughout the country. Designed to spur investment in communities and further economic development, the Opportunity Zones program provides tax incentives for qualified investors to re-invest their unrealized capital gains into Opportunity Zone funds.
Investment Incentives include:
- A temporary tax deferral for capital gains invested in Opportunity Funds.
- A 10% basis increase for long-term capital gains reinvested in the Opportunity Fund.
- A permanent exclusion from taxable income of long-term capital gains.
The U.S. Department of Treasury has designated seven (7) census tracts in the City of Durham as Opportunity Zones. Listed below, each Census Tract is accompanied by an Opportunity Report – courtesy of Enterprise Community Partners and Opportunity 360.
|Census Tract 10.01||Census Tract 15.02|
|Census Tract 11||Census Tract 20.16|
|Census Tract 13.04||Census Tract 23|
|Census Tract 14|
- Encouraging job creation
- Economic Activity
- Housing and other community investments.
“What is an Opportunity Zone Fund?”
The Internal Revenue Service defines a Qualified Opportunity Fund as an “investment vehicle that is arranged as a partnership or a corporation that seeks to invest in eligible properties within the designated Opportunity Zones.”
“How do I invest in an Opportunity Zone Fund?”
The Opportunity Zones program allows investment in various needs within the community. These needs range from investment in businesses to infrastructure.
Eligible corporations and partnerships must self-certify by completing and filing Form 8996 with their federal income tax reform. There is currently a draft form available, with final versions expected in the near future. Additional information can be found at: IRS Opportunity Zones Frequently Asked Questions
“How do I find the locations of Opportunity Zones?”
Designated opportunity zones can be located through the City of Durham mapping tool
The North Carolina Commerce has provided a state-wide mapping tool with additional information regarding the process of zone nomination and designation.
“How does an Opportunity Zone benefit me as an investor?”
As mentioned above, qualified investors benefit from:
- Temporary tax deferral for capital gains reinvested into Opportunity Funds that are recognized by December, 2026 or until the sale of the Opportunity Zone investment.
- A step-up basis for capital gains reinvested in Opportunity Zones in the long-term.
- Permanent exclusion from taxable income of capital gains from sale or exchange of investment in Opportunity Funds if held for at least 10 years.
“How does an Opportunity Zone benefit me as a resident?”
Diversified investing initiatives of the City aim to promote investment in projects that spur economic development within the community. This can include, but is not limited to, encouraging investment in qualified funds that redevelop former and/or existing local businesses to stimulate job creation, encouraging investment in disaster funds for areas affected by natural disasters, and encouraging investment in more affordable housing options.
“Where can I find additional information regarding Opportunity Zones?”
Additional information regarding Opportunity Zones can be found below: