Opportunity Zones/Funds in late 2019
By cabralwalsh November 21, 2019

The 2017 Tax Cut and Jobs Act created Opportunity Zones & Funds. This was designed to stimulate investment in economically depressed areas of the nation.

Delays

In 2018 and 2019, the IRS delayed their guidelines, leading to uncertainty for investors. Most investors have no idea how to reduce capital gains on anything from the sale of stock, to the sale of property, by rolling the proceeds into an Opportunity Fund.

Challenges

By mid-2019, Senator Ron Wyden (OR) and Rep Ron Kind (WI) began to question whether the Act had been designed to benefit Trump campaign donors all along. In November 2019 Wyden introduced legislation on par with Kind’s H.R. 2593.

These proposals create an uncertain future for investors in Opportunity Funds:

  • Here are some of the risks:
    • (Wyden) Removal of “sin” loopholes that would have allowed for stadiums, casinos, self-storage, and luxury apartments.
    • Huge fines for Funds shareholders that do not follow the extensive list of paperwork/disclosures required by law. Kind’s bill authorizes fines of up to $200k. Wyden’s is less punitive, at $20k per infraction.
    • (Wyden) Termination of zones that cannot be called “low income”. This includes an option to replace these Opportunity Zones with new low income zones. The Pearl District Opportunity Zone in downtown Portland and Spring Boulevard/East Eug + Glenwood (Census Tract: 41039003600 – only 16% poverty rate) are good examples of Opportunity Zones that may end up on the chopping block.
    • (Wyden) initiated an investigation into Storey County, Nevada. The Senator does not believe this County has low incomes, and it also happens to be home to a Trump campaign contributor. Expect more investigations to follow. This may or may not include investigations into how Oregon’s Zones were identified, given the lack of transparency during the Zone assignment process.

Opportunity Funds are here to stay. Still, investors should avoid these property investment vehicles until this legislation make its way through Congress, or doesn’t.


Lane County Opportunity Zones Property Searches:

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Alinne Cabral

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