Successful investors know that deferring taxes today can lead to long-term profits.

The recent “Tax Cuts and Jobs Act” offers one new way to do just that – while creating jobs at the same time (https://dced.pa.gov/download/opportunity-zones-subchapter-z/?wpdmdl=83372).

Under the new law, investments in areas designated as “Opportunity Zones” can win substantial tax benefits, including not only the deferral of taxes, but also basis adjustments and potentially a permanent exclusion of gain on sale of properties in such zones.

Although the program was created to “to spur economic development and job creation in distressed communities,” in the Philadelphia area, at least, those zones include some of the hottest neighborhoods for new development (http://www2.philly.com/philly/blogs/inq-phillydeals/trump-tax-break-investors-philadelphia-hottest-neighborhoods-20180924.html).

Even better, taxes on already-appreciated property in those zones can be rolled over into such an investment, to provide additional deferral.

A list of designated zones is online at https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx.  A detailed map of them is available at https://www.cims.cdfifund.gov/preparation/?config=config_nmtc.xml.  A listing by county and zip code is at https://dced.pa.gov/download/final-foz-spreadsheet/?wpdmdl=84233.

Naturally, there are many details and regulations to parse, as with most tax benefits.

But the potential benefit can be well worth that effort – and expense.

For example, qualifying investments must be made through so-called “Opportunity Funds” – you can’t just buy a property in your own name in one of the zones with the intention of getting the tax benefit.

Attorneys Milton H. Cross and Peter D. Cripps of Spector Gadon & Rosen P.C.’s Corporate Law and Real Estate & Real Estate Litigation practice groups are keeping up with the new programs, as well as with the many new rules that are in the pipeline – including IRS regulations expected this fall.

Moreover, even though the program is new, there are already many resources available about it:

https://www.irs.gov/newsroom/opportunity-zones-frequently-asked-questions

https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx

http://www.pcrg.org/a-new-hope-federal-opportunity-zones-in-pennsylvania

The Council of Development Finance Agencies also has a webinar about the program online: https://www.cdfa.net/cdfa/cdfaweb.nsf/ordredirect.html?open&id=201802_IIOA.html

For further information about how you can take advantage of this program, or whether a particular property is eligible for its benefits, please contact Milton H. Cross at 215-241-8811 or mcross@lawsgr.com, or Peter D. Cripps at 215-241-8884 or pcripps@lawsgr.com.