Clock Is Ticking on Opportunity Zones for Tax Year 2019

With the end of 2019 fast approaching, real estate investors would be wise to take advantage of opportunity zones,  a program that provides temporary deferments and permanent exclusion of taxable income to investors who support projects in specific low-income areas.

Created by the Tax Cuts and Jobs Act of 2017, the opportunity zones program allows investors to defer taxes owed on capital gains (i.e., profit from a previous investment, usually in stock or property) by investing these gains into one of 8,700 census tracts designated as opportunity zones. These gains are deferred until December 31, 2026, or the day the property is sold, whichever comes first. The money is invested through an Qualified Opportunity Fund the investor sets up.

As investors consider opportunity zones before tax year 2019 is up, however, it’s important to keep in mind recent proposed regulations, which have provided more clarity and guidance for investors. For example, proposed Treasury Department regulations would allow a 31‐month safe harbor for working capital. Under this rule, assets must be spent on acquiring, constructing and/or substantially improving tangible property in a qualified opportunity zone within 31 months of receipt of those assets. Also, an existing business within an opportunity zone can’t simply self‐certify as a qualified opportunity fund without acquiring new opportunity zone property.

Client Tip: It’s important to not let the “tax tail wag the investment dog”– the ultimate goal should be capital preservation and a degree of comfort with a long-term investment.  

Categorized: Construction, Development, Real Estate, Tax Credits, Taxes

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Christopher R. Rock

Christopher Rock is a public finance lawyer, focusing on real estate construction and infrastructure improvement projects on behalf of hospitals, universities, human services providers, health clinics, affordable housing developers and other public and private entities throughout Massachusetts.  Chris serves as bond counsel, borrower’s counsel, purchaser’s counsel, issuer’s counsel and underwriter’s counsel for tax-exempt, tax credit and taxable financings.

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Jon S. Barooshian

Jon Barooshian is a highly-respected trial lawyer and former state prosecutor who defends businesses and individuals throughout New England and the U.S. Clients, private and publicly-held alike, seek Jon’s help when they’re facing high-risk, high-exposure, high-profile cases, often involving…

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  • Money laundering, securities fraud and theft allegations
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  • Internal investigations and related criminal and civil litigation
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About the Authors

Partner

Christopher R. Rock

Christopher Rock is a public finance lawyer, focusing on real estate construction and infrastructure improvement projects on behalf of hospitals, universities, human services providers, health clinics, affordable housing developers and other public and private entities throughout Massachusetts.  Chris serves as bond counsel, borrower’s counsel, purchaser’s counsel, issuer’s counsel and underwriter’s counsel for tax-exempt, tax credit and taxable financings.

More Posts by Author ›

Stay Connected

Partner

Jon S. Barooshian

Jon Barooshian is a highly-respected trial lawyer and former state prosecutor who defends businesses and individuals throughout New England and the U.S. Clients, private and publicly-held alike, seek Jon’s help when they’re facing high-risk, high-exposure, high-profile cases, often involving…

  • Investigations by government agencies and related civil or criminal litigation
  • Civil and criminal tax controversies
  • Money laundering, securities fraud and theft allegations
  • Forfeiture and
  • Internal investigations and related criminal and civil litigation
Stay Connected

More Posts by Author ›

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