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What is the Qualified Opportunity Zone program?

On Behalf of | Mar 28, 2023 | Real Estate

Rundown areas across the United States are eyesores. They are grounds for criminal activity and add very little to the economy or society.

As an incentive to help revive these areas, the Tax Cuts and Jobs Act, which became law on December 22, 2017, created the Qualified Opportunity Zone program.

The purpose

The program’s purpose is to help encourage investors to bring their money into these disadvantaged areas and to build here. The government hoped that it could help to rebuild the areas and make them into thriving epicenters or communities.

The process

The program works by providing tax incentives to investors. If they put their money into buildings and projects within QOZs, they can save a lot of money on their taxes. In general, they get tax deferment for specific capital gains that meet the requirements and then may earn a percentage off on the taxes when they are due.

To get the benefits, an investor only needs to put money into a project located in a QOZ. There is no requirement to live in the area or even start a business in the area.

The properties

QOZs are all over the country. States nominate areas to become QOZs. The IRS and Treasury Department made final designations of which areas qualified and maintain a list of them.

Investing in a QOZ is something worth considering for investors who want to give back, help out a community and make a smart financial move. Anyone considering this investment should make sure they understand how QOZ works.