The Marshall Opportunity Zone was created by the federal Tax Cut and Jobs Act (2017), a program designed to encourage economic development and job creation in rural and low-income urban communities by using tax incentives to encourage private investment in an impact fund, known as a Qualified Opportunity Fund (QOF).
A QOF is an investment vehicle set up as a partnership or corporation for investing in eligible property located in a qualified Opportunity Zone. Investors who invest in a QOF are eligible to benefit from a reduction in tax liability on realized capital gains in one of several ways:
• Deferral: Investors can defer tax on any prior gains that are reinvested in a QOF until the earlier of the date on which the investment is sold or exchanged, or December 31, 2026.
• Partial Forgiveness: QOF investments held for five (5) years or longer receive a 10% reduction on the deferred gain; if held for seven (7) years or longer, the reduction increases to 15%.
• Full Forgiveness: Investments held for at least 10 years are exempt from capital gains taxes on the potential profits from the QOF.
Investors should consult with a tax attorney with a specialization in Opportunity Zones before making an investment. Additional information about Marshall’s Opportunity Zone is provided with this map: Click here for pdf.