Treasury Issues Rules on Tax Breaks for Opportunity Zones

Even before the administration has finished issuing its rules, the zones have become a boon for real estate developers and drawn criticism from people who say they will mostly enrich well-heeled investors and speed up the displacement of low-income residents in gentrifying areas.

Treasury officials have developed a series of tests, in the regulations they began releasing in October, for which investments should qualify for the tax breaks. One key test many local officials use to evaluate the zones is whether the tax breaks encourage job-creating businesses, not just condos, retail stores, hotels and other real estate projects that often don’t create many permanent jobs with opportunities for advancement.

Mr. Scott and others have urged officials to set rules that encourage investment in entrepreneurship, and to attract a wide variety of investors, including venture capitalists who could establish funds that would back multiple projects in various zones.

The rules released on Wednesday, ahead of a White House meeting on the program, seek to meet that request in several ways.

They include provisions that will allow investors to qualify for the breaks even if the businesses they fund focus on exported goods or services or the domestic market outside the zone. Long-vacant properties will immediately qualify for the tax breaks. Investors will be allowed to share their stakes in funds that invests in the zones, and to sell, say, a start-up in an Opportunity Zone as long as the money is reinvested in another qualifying business or asset. Real estate investors will be allowed to lease and refinance their properties.

Mr. Trump heralded the regulations and the program, calling the zones “really a crucial part of our new tax law to help low-income Americans.”

“As you know,” he said at the White House, “this vital provision gives businesses a massive incentive to invest and create jobs in our nation’s most underserved communities.”

Article source: https://www.nytimes.com/2019/04/17/business/economy/opportunity-zones-treasury-regulations.html?partner=rss&emc=rss