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When Opportunity Comes Knocking

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When Opportunity Comes Knocking

Understanding Opportunity Zones

By: Emily Hodge

 opp-zones

Earlier this year, two census tracts in Oconee County received designation as Opportunity Zones. Sounds pretty fancy, right? Opportunity Zones are a recently established program through the Tax Cuts and Jobs Act of 2017. Across the country, states were given the chance to submit their low-income community census tracts for this designation. In Oconee County, the Oconee Economic Alliance took charge of submitting several of our eligible tracts to the state. Out of the 538 eligible tracts in South Carolina, only 25% were selected, with the Utica and Newry tracts receiving the designation within Oconee County.

This all sounds pretty exciting, but you may be wondering, what is an Opportunity Zone? Opportunity Zones are low income census tracts that have been certified by the U.S. Department of the Treasury to receive federal capital gains tax advantages. These are received when investors finance new projects and enterprises through capital investments, called Opportunity Funds.

Opportunity Funds are private sector investment vehicles that invest at least 90 percent of their capital in Opportunity Zones. This capital can come from investors who choose to move their stock and mutual fund investments into Opportunity Funds. This allows the unrealized capital gains in these accounts to be put to work to rebuild the communities that need it most. It is estimated that there is approximately $6 trillion in unrealized capital gains in stocks and funds throughout the United States. Even if only a portion of this money finds its way into Opportunity Funds, it could make a substantial difference in underserved areas. Aside from helping areas, there are other incentives for investors to put their capital to work in Opportunity Funds. These range from temporary tax deferrals, to a step-up in basis if funds are held in the opportunity fund for more than five years.

With the two Opportunity Zones in Oconee County, we can expect to start seeing some changes in the Newry and Utica areas as investment begins. The Utica tract also contains the Seneca Rail Park, which is a certified industrial park. The new Opportunity Zone designation will add yet another incentive for companies looking to put a new facility within this park. The Oconee Economic Alliance is proud to have assisted with securing the designations of these two areas as Opportunity Zones. The way we see it, when an opportunity like that comes knocking, you can’t help but answer the door.

 

For more information about Opportunity Zones, contact the Oconee Economic Alliance Office at 864-638-4210

Emily Hodge is the Research Specialist for the Oconee Economic Alliance, which is a public-private nonprofit effort to accelerate job creation and capital investment, increase per capita income, diversify the local tax base and generate awareness of Oconee County as a business location. To learn more visit www.InvestOconeeSC.com.

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