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Opportunity Zones



A Big Tax Break for Socially Responsible Investing

Opportunity zones have recently been pushed as a development incentive, hoping to spur capital investment in underserved areas. They work in an interesting way- investors use their "embedded gains" by reinvesting the profits into opportunity zone funds. The longer they maintain the investment the larger the tax break that they will receive- from 10%, to tax free if it lasts for 10 years.

However, there are risks involved. Some investors hesitate, wondering if they would get money out of the areas in which it was placed. Additionally, there are concerns about tracking the progress in an initiative with no background. Others hesitate based on questioning how it will benefit the community. Those who seek to be socially responsible, in particular, want added layers of diligence in order to be sure that the area is truly low income, or will see a community change for the better.

The regulations for these areas are not yet final, with more hearings to be held in January. Hopefully, public hearings will help to make the legislation more robust in their effectiveness, with more checks to make sure that communities aren't exploited for someone else's benefit.

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