Tax-Advantaged Investments
Opportunity Zones offer significant tax benefits for investors who invest capital gains in designated communities.
$100B
Estimated private capital over 10 years
20%
Poverty rate threshold for eligibility
25%
Max eligible tracts per state
What Are Opportunity Zones?
Qualified Opportunity Zones are census tracts with a 20% poverty rate and 80% area median income. The incentive applies exclusively to recently realized capital gains used as equity capital. 5% of qualified tracts can be exempt if contiguous.
Four Components of Opportunity Zones
Zones
States designated up to 25% of eligible census tracts, certified by U.S. Treasury.
Funds
Qualified Opportunity Funds (QOFs) are investment vehicles, self-certified with Form 8996.
Investments
QOFs make equity investments in projects located in Opportunity Zones.
Projects
Eligible projects include new or substantially improved properties, or stock/partnership interest in operating businesses.
Tax Rules and Benefits
Capital gains must be invested in a QOF within 180 days to qualify. 90% of QOF assets must be invested in OZ projects each tax year.
Deferral
Capital gains tax deferred until 2026
10% Reduction
If held for 5 years, 10% reduction in deferred gain
15% Reduction
If held for 7 years, 15% reduction (until 2026)
Tax-Free Growth
If held for 10+ years, new gains are tax-free
Baltimore Opportunity Zone Clusters
West Baltimore Cluster
Pimlico/Park Heights, Mondawmin, Penn North, Reservoir Hill, Druid Heights, Sandtown Winchester, Madison Park, Upton, Poppleton, Hollins Market, Midtown-Edmondson
17
Census Tracts
East Baltimore
Northwood/Morgan State, East Baltimore/Midway, Broadway East, Middle East, Oliver, Perkins Homes, Old Town, Penn-Fallsway, Greenmount West/Charles North
11
Census Tracts
Downtown
Central Business District
1
Census Tracts
Southeast Baltimore
Orangeville/Pulaski Industrial Areas, Bayview, Canton Industrial Area, Greektown, Broening Manor
4
Census Tracts
South Baltimore
Pigtown, Stadium Area, Westport, Port Covington, Cherry Hill, Curtis Bay, Hawkins Point
9
Census Tracts
White House Opportunity and Revitalization Council
Established 12/12/2018, comprised of 13 federal agencies.
- Focus federal investment in Opportunity Zones
- Minimize regulatory costs
- Solicit local feedback
- Develop metrics for measuring OZ impacts