The Opportunity Zone (O-Zone) Tax Incentive was created by
the Tax Cuts and Jobs Act at the end of 2017 to encourage patient private
investment of capital into projects, businesses and property development in
low-income areas.
In June 2018, sixty-one of Nevada’s low-income census tracts received official
designation as Qualified Opportunity Zones (QOZ) by the U.S. Department of
Treasury and the IRS.
The tax incentives reduce taxes on realized capital gains
that are quickly reinvested into these designated census tracts by providing three benefits: 1)The deferral of taxes; 2) A reduction in taxes by 10 to 15 percent; 3)The exclusion of capital gains tax on appreciation if held for 10 years. O-Zone investments take the form of equity, are expected to
account for up to 30 percent of the capital investment in an entity, and must
be made through Opportunity Zone Funds (O-Funds).
This incentive is expected to generate billions of dollars of investment into low-income areas that have previously not been able to attract reasonable cost of capital to spur economic and community development.