Who Should Take Advantage of Qualified Opportunity Zones?
Qualified opportunity zones are a helpful tax incentive that helps generate investor interest in local community development. Here’s who can benefit the most.
For communities facing economic hardship, getting a chance at some extra funding can make a huge difference. Distressed areas with poor job opportunities, wages and growth can benefit from increased cashflows. Qualified opportunity zones are areas designated as needing economic assistance in these areas.
People with adequate assets and resources can invest in qualified zones while receiving tax benefits to aid their development. So, who should take advantage of qualified opportunity zones?
Individuals
Qualified individuals can invest in opportunity zones, but doing so directly has requirements you must follow. Opportunity zone investments must go through a qualified opportunity fund to be legally certified, so you can’t invest directly.
Taxpayers can fill out IRS Form 8996 to certify their participation in a QOF. Being patient and going through the correct channels will pay off in the long run. If you sit on the investment for enough time, you can benefit from tax-free gains.
Corporations
Corporate entities can also take advantage of opportunity zone investments. Beyond the basic requirements other investors have to follow, corporate investors can utilize the opportunity through more significant investments.
If at least 90 percent of corporate assets are held in the opportunity zone and the business qualifies as a corporation or partnership, it can gain QOF status. It will also become a funder. Opportunity zones should be considered a long-term investment strategy. The holding period for opportunity zone investments can be up to 10 years, so corporations need to plan their investment strategies ahead of time.
Nonprofits can also benefit from qualified opportunity zones. Critical criteria such as housing, job availability and education can directly influence how funds are allocated. Nonprofits can use the tax incentives to power development in these areas.
Community-focused projects can be driven by nonprofit participation in QOFs and other business practices. Nonprofits can work alongside businesses to ensure everyone in communities has equal access and opportunity while the areas are being developed.
More Businesses Are Taking Notice
Knowing who should take advantage of qualified opportunity zones will make it easier for communities to receive funding for essential projects and infrastructure.
Qualified opportunity zones incentivize greater community support from everyone. By working together, businesses and communities can create new opportunities that allow them to thrive.