Comprehensive Guidance for Seizing and Optimizing Investments in Opportunity Zones
In 2017, Congress created significant tax incentives for investment in Opportunity Zones. An investor who has recognized capital gains and makes a timely investment in a "Qualified Opportunity Fund" may (1) defer the payment of tax on such capital gains, (2) potentially eliminate 15% of the deferred capital gain from tax, and (3) subject to holding period requirements, eliminate any gain from the appreciation in value of the investment in the Qualified Opportunity Fund.
For an investment vehicle to be a Qualified Opportunity Fund, it must make investments almost exclusively in approved Opportunity Zones: either property located in Opportunity Zones or businesses that operate primarily in Opportunity Zones and meet certain other requirements.
Opportunity Zones have been designated in all 50 states, the District of Columbia and five U.S. possessions and in more than 8,750 population census tracts. Many of the designated Opportunity Zones are located in areas that are extremely desirable for new development and new businesses.
Saul Ewing attorneys help guide developers, investors, business and property owners, and other real estate participants on Opportunity Zone investments and projects. Our multidisciplinary team includes attorneys in the areas of tax; real estate; private equity and venture capital; financing; securities; and regulatory, compliance and government. Our services include:
- Structuring Qualified Opportunity Funds, including tax planning and the preparation of fund documents in accordance with securities law rules and regulations
- Analyzing Opportunity Zone investment opportunities and the related legal requirements
- Assisting clients with both debt and equity financing, including the establishment of public-private partnerships
- Representing clients in the acquisition, development, operation and sale of properties in Opportunity Zones, including all related real estate and construction matters
- Advising on clients’ investments in businesses and partnerships in Opportunity Zones or the divesture of those interests
- Providing advice on tax matters related to these investments, including compliance with the Opportunity Zone rules outlined by the Treasury Department and the IRS and the availability of tax credits and other tax benefits
- Advising on environmental regulatory, transactional and litigation matters related to wind and solar projects if the fund invests in renewable energy
- Providing on-going compliance advice
Our team closely monitors the Opportunity Zone rules and regulations to keep our clients abreast of this evolving program while seeking to capitalize on its benefits. In addition to delivering effective legal structures and implementation strategies, we have groups of real estate attorneys who are focused on the Opportunity Zone projects in their specific areas and understand how the program impacts their local real estate markets in Delaware, District of Columbia, Florida, Illinois, Maryland, Massachusetts, New Jersey and Pennsylvania.
