A relatively new piece of the real estate developer/investor tool box are Opportunity Zone Funds.
An Opportunity Zone is a low-income census tract with an individual poverty rate of at least 20 percent and median family income no greater than 80 percent of the area median.
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Center of Community Progress
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An Opportunity Zone can receive funds from Opportunity Funds. Opportunity Funds provide investors the chance to put that money to work rebuilding the low to moderate income communities. The fund model will enable a broad array of investors to pool their resources in Opportunity Zones, increasing the scale of investments going to underserved areas.
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http://www.buffalony.gov/1226/Opportunity-Zones
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Investors must invest in a qualified opportunity fund which holds at least 90% of its assets in qualified opportunity zone property. A qualified opportunity fund is an investment vehicle organized as a corporation or a partnership for the purpose of investing in qualified opportunity zone property. There are two main incentives to encourage investment in qualified opportunity funds. First, taxpayers can temporarily defer the inclusion in gross income of capital gains that are reinvested in a qualified opportunity fund. Taxpayers can also permanently exclude capital gains from the sale or exchange of an investment in a qualified opportunity fund held for more than 10 years. Generally, both the deferral and exclusion of the capital gains from federal income will flow through to New York State. This means those gains will also be deferred and excluded from New York taxable income.
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http://www.buffalony.gov/1226/Opportunity-Zones
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Updated regulations regarding Opportunity Funds are due out very soon. Many hope unclarified procedures and hindering rules will be improved upon to allow Opportunity Zones and investors to maximize the incentives.