Opportunity Zones

Opportunity Zones is a ten year program that offers a tax incentive to encourage investors to re-invest their unrealized capital gains into Opportunity Funds that are dedicated to investing into low-income or under-served urban and rural communities nationwide. This community development program was established by Congress in the Tax Cuts and Jobs Act of 2017 and is administered by the U.S. Treasury.

Of the 149 designated Opportunity Zones in Maryland, four tracts are located in Anne Arundel County; One in Odenton and three in Brooklyn Park. View the state’s interactive map by clicking here.

According to the Economic Innovation Group, the Opportunity Zones program offers three tax incentives for investing in low-income communities through a qualified Opportunity Fund:

Temporary Deferral

A temporary deferral of inclusion in taxable income for capital gains reinvested into an Opportunity Fund. The deferred gain must be recognized on the earlier of the date on which the opportunity zone investment is disposed of or December 31, 2026.

Step Up in Basis

A step-up in basis for capital gains reinvested in an Opportunity Fund. The basis is increased by 10% if the investment in the Opportunity Fund is held by the taxpayer for at least 5 years and by an additional 5% if held for at least 7 years, thereby excluding up to 15% of the original gain from taxation.

Permanent Exclusion

A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in an Opportunity Fund if the investment is held for at least 10 years. This exclusion only applies to gains accrued after an investment in an Opportunity Fund.