A program with the potential to attract investment capital into low-income areas of North Carolina was created by recently passed federal tax legislation, known as The Tax Cuts and Jobs Act (H.R.1). North Carolina Opportunity Zones will offer qualified investors certain tax benefits when they invest unrealized capital gains into these areas. North Carolina’s 252 zones were certified by the United States Treasury on May 18, 2018.
Guided by data and driven by local priorities, North Carolina’s process to identify these tracts, coordinated by the North Carolina Department of Commerce, included an extensive review of census data, public input collected from the Department’s website and direct outreach, and close collaboration with local officials from across the state.
- H.R. 1 (the Tax Cuts and Jobs Act) was signed into law on December 22, 2017.
- The Opportunity Zones Program (Sec. 13823) provides tax incentives for qualified investors to re-invest unrealized capital gains into low-income communities throughout the state, and across the country. Low-income census tracks are areas where the poverty rate is 20 percent or greater and/or family income is less than 80% of the area’s median income.
- Investments made by qualified entities known as Opportunity Funds into certified Opportunity Zones will receive three key federal tax incentives to encourage investment in low-income communities.
- Opportunity Zones Best Practices Report to the President from the White House Opportunity and Revitalization Council, published May 2020, click here.
What are Opportunity Zones?
The Tax Cuts and Jobs Act of 2017 grants significant tax benefits to investors who reinvest their capital gains in Opportunity Zone Funds which invests in eligible businesses and properties located in federally designated “Opportunity Zones.” An Opportunity Zone is an economically-distressed census tract where Opportunity Zone Funds may invest.
Where are the Opportunity Zones?
The U.S. Department of Treasury certified 252 census tracts* in North Carolina. Zoom into the map above to explore two census tracts in Catawba County and another census tract in adjacent Burke County which contains the Hickory Regional Airport.
(*Census tracts are small, statistical subdivisions of a county or similar entity created to help provide a stable set of geographic units for the presentation of statistical data.)
How are Opportunity Zones useful?
Investors with recently realized capital gains invest in local businesses, real estate, or development projects through Qualified Opportunity Funds (QOF)** in exchange for a reduction in their tax obligations. At least 90 percent of the QOF investments must be spent on an operating business, equipment, or real estate within an Opportunity Zone that double the value of the project within 180 days of the investment. The funds do not provide direct grants but could provide equity investments in vetted projects that show a significant return on investment.
(**A Qualified Opportunity Fund is an investment vehicle that is set up as either a partnership or corporation for investing in eligible property located in an Opportunity Zone. Investors can defer tax on any prior gains invested in a Qualified Opportunity Fund until the earlier of the date on which the investment in a QOF is sold or exchanged, or Dec. 31, 2026.)
How can I learn more?
Opportunity Zone Fund Directories
OpportunityDb Opportunity Zone Fund Directory
Novogradac Oportunity Zones Resource Center
OpportunityFunds.com Fund Directory