Barry County Explores The Land Of OZ
2019-03-14 | The Hastings Banner
"This is a very real opportunity. It's my directive to work with the
Opportunity Zones are areas designated as being eligible locations for investors to receive federal incentives for funding development projects. In
The qualifying tract of land in
The zones are low-income census tracts as determined with the New Markets Tax Credits legislation. The tracts are designated by the governor of the state or territory in which it is located. The designations stay in place for 10 years, beginning in 2018. Governors had 90 days from its enactment in January to submit nominations in writing to
Governors were given broad discretion when choosing their designations, but were advised by
"This is a financial investment tool a private business deal between two parties where one invests in the other's development project with the expectation of a return," Mroz said. "This program is strictly for investors, and not one awarded to companies or communities."
A temporary deferral where an investor can defer capital gains taxes until 2026 by putting and keeping unrealized gains in an
A reduction where the original amount of capital gains that an investor has to pay deferred taxes is reduced by 10 percent if the
An exemption where any capital gains on investments made through the
According to Mroz, the entire program is about capital gain.
"You cannot take private dollars you already have in a bank account and use it to invest. It is only about money that qualifies as capital gain," Mroz said.
An example he gave was the sale of stock purchased at
Opportunity Funds are investment vehicles organized as corporations or partnerships for the purpose of investing in a qualified
If a private owner or public developer already owns a building, obtaining funding through the program becomes more difficult.
"If it's a brand new purchase, you don't own it yet, and you're looking to purchase something, you're in the best spot you can be," Mroz said. "If you've owned the building for 10 years, to possibly be eligible for funding, the project must be substantial improvement. If you go one or two steps beyond completely gutting the building, you need to seek legal counsel because some things qualify, and some don't."
Opportunity Funds are not dispersed as grants. They are considered an investment loan. Fund accounts can be created by anyone. Working with an attorney, qualifying capital gain can be placed in an
Developments qualifying for investment loans fall within a wide range of potential projects, such as high-growth startups, main street businesses, real estate, manufacturing facilities, brownfield redevelopment, entrepreneurship incubators and accelerators, rental housing and affordable housing.
Details about Opportunity Zones, rules and regulations are available at the MSHDA website at https://www.michigan.gov/mshda.