New ‘Opportunity Zones’ Offer Tax Benefits

BY STEVE DINNEN

Opportunity Zones are coming, and they offer a way to spur economic development in depressed areas while providing great tax shelters.

The zones were created as part of last year’s federal tax overhaul. They allow states to designate lower-income census tracts as areas where investors can kick money into funds that will be used to start some kind of business. There are 62 zones across Iowa, with two in Des Moines and one in West Des Moines. Investors need not live in a zone to participate in one.

Investors will pour money into a fund from proceeds they receive from a prior investment. So if you score a $100,000 gain on a stock sale, for instance, you can roll that into an Opportunity Zone fund and defer taxes on the gain. If you leave the money inside the fund for the 10-year life span, you get a stepped-up basis and avoid taxes on the original gain plus anything that may accrue by way of the investment.

Details are still being formulated by the U.S. Treasury. Yet to be settled: who will administer these funds, how they will select an investment, and who will manage the investment.

The Iowa Economic Development Authority is handling things at the state level.

You May Also Like

For a tax break, act soon to qualify for Endow Iowa incentive

By Steve Dinnen Change is coming to Endow Iowa. So now might be a ...

How Women May Approach Investing Differently Than Men

Writer: Steve Dinnen It is true that women don’t invest as much as men. ...

New Limit on Deducting State, Local Taxes

BY STEVE DINNENIt’s like rubbing SALT into a wound.Bad pun aside, in this case ...