Opportunity Zones
I See It Ventures, Inc. Opportunity Zone Involvement
We are passionate about driving capital investment, generating economic development, and creating new jobs to enhance communities and give back to their residents. In 2019, that passion fueled Gordon Whitten to research Opportunity Zones as a canvas for his next ventures. After visiting numerous cities across the U.S., he decided to focus his efforts on a Qualified Opportunity Zone in Ralston, Nebraska.
Ralston is a great choice because of its central location in the Omaha Metro, aggressive business development interest, and exciting new Hinge Redevelopment Project. Gordon moved I See It Ventures, Inc. to Ralston and launched his new business accelerator and real estate development project within the Hinge. I See It Ventures, Inc. looks forward to expanding and leading many future Opportunity Zone projects within Nebraska and the U.S.
What is an Opportunity Zone?
An Opportunity Zone is a census tract containing communities that qualify for investor tax incentives based on the Tax Cuts and Jobs Act of 2017. Downtown, industrial, suburban and rural areas can all be found within Opportunity Zones. The purpose of the zones is to focus investors on overlooked communities that stand to benefit from economic investment. The U.S. has more than 8,700 Qualified Opportunity Zones across the whole country.
How to Invest in an Opportunity Zone
Opportunity Zones provide investors with tax incentives if they invest capital gains into Opportunity Zones. An investor with a capital gain who wishes to invest in an Opportunity Zone must form a holding company for the investment called a Qualified Opportunity Fund (QOF). Placing a capital gain in a QOF indicates to the IRS that you are deferring taxes on your capital gain and investing in one or more Opportunity Zones. QOFs are required to invest and hold at least 90% of their assets in Qualified Opportunity Zone Businesses. Furthermore, Qualified Opportunity Zone Businesses must hold most of their assets as business property, and at least 50% of the business’s activity must take place within any opportunity zone.
Tax Benefits of Investing in an Opportunity Zone
Opportunity Zones generate economic development and provide tax benefits to investors. Investors can defer taxes on gains invested in QOFs until the investment is divested or until December 31, 2026, whichever comes first. If the QOF investment is held for at least 5 years, there is a 10% step up in basis that reduces the taxes due on the original gain.
If a QOF investment is held for at least 10 years, all gains on the new investment are NOT taxable. Furthermore, tax payers are NOT subject to depreciation re-capture on QOF investments held for at least 10 years.
The result is QOF investors can invest in larger projects, retain all of the growth and offset income taxes realized from their Qualified Opportunity Zone investments.