What are opportunity zones?
What are
the benefits?
How do I
stay compliant?
What is the industry impact?
How can I find out if opportunity zones
are right for me?
What are opportunity zones?
What is the industry impact?
How do I
stay compliant?
How can I find out if opportunity zones
are right for me?
What are
the benefits?
Congress enacted the Opportunity Zone Program as part of tax reform legislation to direct long-term investment into underserved communities. The program designated nearly 9,000 “Opportunity Zones” across the United States and created favorable tax incentives to attract investment to those areas. Anyone is eligible to invest in opportunity zones, as long as they do so through a “qualified opportunity fund” (QOF).
WHAT ARE OPPORTUNITY ZONES?
It’s good for investors and it’s good for the community. From an investment perspective, opportunity zones can help reduce total tax liability, but maximizing savings requires patience. Investors can defer taxes on capital gains by keeping those funds in a QOF until December 31, 2026 or the fund is divested – whichever occurs first. Take a closer look at the investment benefits.
WHAT ARE THE BENEFITS?
Introduced as part of tax reform legislation in 2017, recent relief was provided for QOFs and investors affected by the coronavirus pandemic. Partnering with advisors that understand the compliance requirements and industry implications is crucial.
Top considerations include understanding which gains qualify for deferment and ensuring the
QOF meets and maintains the qualifying gross income requirements.
HOW DO I STAY COMPLIANT?
Read Opportunity Zone Guidance
Listen to a BDO Opportunity Zone Webinar
Private Equity
WHAT IS THE INDUSTRY IMPACT?
Family Offices
REITs
Construction
Private equity firms with real estate experience may form their own QOFs to invest directly in opportunity zone projects. Otherwise, they should find a QOF operator that can prove a track record of success investing in underserved communities.
Private equity and venture capital firms are well-positioned for the opportunity zone program. Find out how to maximize the
tax benefits.
Opportunity zones are of interest to many family offices. The program’s tax incentives, long-term investment horizon and focus on impact investing are aligned with many family offices’ investing strategies. Family offices without experience in underserved communities should find a QOF operator that can demonstrate previous success working in similar areas.
Take a closer look at opportunity zone investing for family offices.
Real Estate Investment Trusts (REITs) may want to form their own QOFs that can directly acquire or develop properties in opportunity zones. An opportunity zone designation does not guarantee a successful investment. When assessing a project, REITs should consider: Are the area’s property values and income levels likely to grow? Does the developer or business have an established track record of success? Find out ways in which REITS can invest in qualified properties.
The surge of interest in opportunity zones presents significant opportunity for construction firms, and they should prepare for a potential rush of demand for projects. While the program could provide construction companies with new business, they shouldn’t let the hype override usual due diligence. A costly dispute arising from a hastily bid project could outweigh the projected profits. Learn more about how construction can capitalize on opportunity zones.
Reach out to the BDO advisor in your region to find out whether opportunity zones are the right investment vehicle for you.
HOW CAN I FIND OUT IF OPPORTUNITY ZONES ARE RIGHT FOR ME?
contact
Mike Dean
Central Region
312-616-3967
Email
Billy Morrow
Southeast Region
904-224-9781
Email
Brandon Pauler
Southwest Region
713-407-3996
Email
Maureen McGetrick
Construction Industry
212-885-8391
Email
Craig Witcher
Family Office
616-389-8679
Email
Bob Klein
Real Estate Industry
732-734-1006
Email
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Michael Hurwitz
Northeast Region
212-515-5450
Email
Brandon Pauler
Private Equity Industry
713-407-3996
Email
Billy Morrow
West Region
904-224-9781
Email
Billy Morrow
Atlantic Region
904-224-9781
Email
Read COVID-19
Guidance Updates/New
Planning Opportunities
Read About COVID-19
Relief Provided for QOFs
and Investors