What is an Opportunity Zone?
The Qualified Opportunity Zone federal program, enacted as part of the Tax Cuts and Jobs Act of 2017, provides unprecedented tax deferral and gain exclusion incentives to supercharge development in 8,764 low-income communities across the U.S. In Wisconsin alone, there are 120 Opportunity Zones spanning rural, urban and tribal areas.
Opportunity Zones are designed to incentivize the sale of capital assets and spur the reinvestment of sale proceeds in qualified low-income communities. The incentive comes in the form of three significant tax benefits for eligible investors:
- Capital gains taxes can be deferred until as late as 2026
- Either 10 percent or 15 percent of deferred capital gains can be forgiven
- Post-investment appreciation can be excluded, if investments are held for 10 years
Want to learn more about Opportunity Zones? The U.S. Department of the Treasury has developed an Opportunity Zones resource page which features an interactive map.
How Godfrey & Kahn can help
With a multidisciplinary team of tax, corporate and real estate attorneys, Godfrey & Kahn is well-suited to help clients identify the most beneficial plan for Opportunity Zone investments, while ensuring compliance with legal requirements. We draw on a robust knowledge base of tax, real estate, finance, securities and corporate law to counsel investors, fund managers and businesses on the formation of qualified opportunity zone funds and the operation of qualified opportunity zone businesses.
Our innovative methods of promoting and safeguarding our clients’ interests help maximize available tax benefits in a cost-effective and timely manner.
Our Opportunity Zone capabilities include:
- Formation of qualified opportunity funds and qualified opportunity zone businesses including real estate, start-up and other types of businesses
- Tax structuring to maximize tax incentives, while ensuring compliance with evolving regulatory guidelines
- Securities offerings compliance
- Advising on investor exits, capital deployment/redeployment, business operations, and asset acquisitions and dispositions
- Combining and synergizing the Qualified Opportunity Zone program with other federal, state and local incentives
We’ve recently assisted clients on the following Opportunity Zone projects:
- A 228-unit student housing development in Corvallis, Oregon
- An 87-unit luxury residential development in Wausau, Wisconsin
- Build-to-suit and turnkey office space developments in Madison, Wisconsin
- Redevelopment projects in western Milwaukee, Wisconsin
- Redevelopment of a historic downtown building into a mixed-use retail/multifamily development, and construction of a second residential development in downtown Appleton, Wisconsin
- Creating a qualified opportunity fund to facilitate the investment of realized gain into a luxury hotel development