As defined by the Internal Revenue Service, an Opportunity Zone is an economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Opportunity Zones were added to the tax code by the Tax Cuts and Jobs Act on December 22, 2017. The intent is to bring opportunities to residents as well as investors in historically distressed and blighted communities. The law allows investors to postpone taxes on profits from the sale of any asset until 2026, as long as those profits are re-invested into an Opportunity Zone Fund. To qualify for the tax benefit, the profits must be transferred into an Opportunity Zone Fund within 180 days of receipt. The Fund is then used to purchase existing buildings and renovate them, purchase land for new development or buy shares in existing businesses in these designated areas.
The longer the money is invested in an Opportunity Zone, the greater the tax benefit. If an investor keeps their investment in the Opportunity Zone for 10 plus years and sells for a profit, the capital gain from that sale would be tax free. The program’s tax benefits only apply to investments made after 2017. Properties purchased in Opportunity Zones prior to 2017 come under a different set of guidelines and will not receive the same tax benefits from the program. The Treasury Department anticipates at least $100 billion in private money will be invested into these distressed communities as a result of the program.
Florida has 427 Opportunity Zones, including 68 in Miami-Dade, 30 in Broward and 35 in Palm Beach county. Within these zones there are more than 100,000 Opportunity Zone properties according to Reonomy, a real estate data website. Fort Lauderdale already has several qualified neighborhoods such as Flagler Village, the Progresso area and the Sistrunk Corridor. Although development has previously started in these areas, the new Opportunity Zone designation could significantly increase further investment in these neighborhoods, which would be a benefit to the city.