The Real Deal New York

Opportunity Zones guidelines released, offering developers more details

New information on the tax incentive development plan include how much of a project must be situated in the zone to qualify
October 19, 2018 01:50PM

The Opportunity Zones Map (Credit: NCRC)

UPDATED, 3:06 p.m, Oct. 19, 2018: Real estate developers and fund managers with questions about how to invest in the Opportunity Zones program are beginning to get more detailed answers. The U.S. Treasury Department today released more guidelines.

The program, enacted late last year as part of the Trump administration’s tax overhaul, provides tax deferments and tax breaks for developers who invest in projects in designated low-income neighborhoods across the country.

Among the new guidelines is a definition of a 70-30 rule. It specifies that a business will qualify for the program if 70 percent of the company’s property is located within a designated zone, according to the Wall Street Journal.

Treasury officials told the paper the initial set of rules will assist investors in making decisions to start projects.

Developers will also be granted an additional 30 months to hold working capital for residential and retail construction projects, easing a concern among developers.

Recently, investment firms and real estate developers have rushed to set up Opportunity funds to invest in these zones, as a looming deadline to take full advantage of a 15-percent tax break will expire at the end of 2019. Among the firms are Fundrise, EJF Capital and a joint venture of Youngwoo & Associates and EquityMultiple, which have each announced plans to raise $500 million funds. RXR Realty is also reported to be in discussions to set up a fund. [WSJ] — David Jeans