Opportunity Zone FAQs

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This page contains a list of frequently asked questions (FAQs) from the IRS and from the City. Scroll down to read all answers to FAQs. 

 

IRS FAQs 

The following are frequently asked questions and answers created by the IRS about Opportunity Zones and are published on the IRS website here

Q. What is an Opportunity Zone?

A. An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation of authority to the Internal Revenue Service.

Q. How were Opportunity Zones created?

A. Opportunity Zones were added to the tax code by the Tax Cuts and Jobs Act on December 22, 2017.

Q. Have Opportunity Zones been around a long time?

A. No, they are new. The first set of Opportunity Zones, covering parts of 18 states, were designated on April 9, 2018. Opportunity Zones have now been designated covering parts of all 50 states, the District of Columbia and five U.S. territories.  

Q. What is the purpose of Opportunity Zones?

A. Opportunity Zones are an economic development tool—that is, they are designed to spur economic development and job creation in distressed communities.

Q. How do Opportunity Zones spur economic development?

A. Opportunity Zones are designed to spur economic development by providing tax benefits to investors. First, investors can defer tax on any prior gains invested in a Qualified Opportunity Fund (QOF) until the earlier of the date on which the investment in a QOF is sold or exchanged, or December 31, 2026.   If the QOF investment is held for longer than 5 years, there is a 10% exclusion of the deferred gain.  If held for more than 7 years, the 10% becomes 15%.  Second, if the investor holds the investment in the Opportunity Fund for at least ten years, the investor is eligible for an increase in basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged.

Q. What is a Qualified Opportunity Fund?

A. A Qualified Opportunity Fund is an investment vehicle that is set up as either a partnership or corporation for investing in eligible property that is located in a Qualified Opportunity Zone. 

Q. Do I need to live in an Opportunity Zone to take advantage of the tax benefits?

A. No. You can get the tax benefits, even if you don’t live, work or have a business in an Opportunity Zone. All you need to do is invest a recognized gain in a Qualified Opportunity Fund and elect to defer the tax on that gain.

Q. I am interested in knowing where the Opportunity Zones are located. Is there a list of Opportunity Zones available?

A. Yes. The list of designated Qualified Opportunity Zones can be found at Opportunity Zones Resources and in the Federal Register at IRB Notice 2018-48.  Further a visual map of the census tracts designated as Qualified Opportunity Zones may also be found at Opportunity Zones Resources [link].

Q: What do the numbers mean on the Qualified Opportunity Zones list, Notice 2018-48? 

A: The numbers are the population census tracts designated as Qualified Opportunity Zones.

Q: How can I find the census tract number for a specific address? 

A: You can find 11-digit census tract numbers, also known as GEOIDs, using the U.S. Census Bureau’s Geocoder.  After entering the street address, select ACS2015_Current in the Vintage drop-down menu and click Find.  In the Census Tracts section, you’ll find the number after GEOID.

Q. I am interested in forming a Qualified Opportunity Fund. Is there a list of Opportunity Zones available in which the Fund can invest?

A. Yes. The list of designated Qualified Opportunity Zones in which a Fund may invest to meet its investment requirements can be found at Notice 2018-48.

Q. How does a corporation or partnership become certified as a Qualified Opportunity Fund?

A. To become a Qualified Opportunity Fund, an eligible corporation or partnership self-certifies by filing Form 8996, Qualified Opportunity Fund, with its federal income tax return. Early-release drafts of the form and instructions are posted, with final versions expected in December. The return with Form 8996 must be filed timely, taking extensions into account.

Q: Can a limited liability company (LLC) be an Opportunity Fund?

A: Yes.  A LLC that chooses to be treated either as a partnership or corporation for federal tax purposes can organize as a Qualified Opportunity Fund.

Q.  I sold some stock for a gain in 2018, and, during the 180-day period beginning on the date of the sale, I invested the amount of the gain in a Qualified Opportunity Fund.  Can I defer paying tax on that gain?

A. Yes, you may elect to defer the tax on the amount of the gain invested in a Qualified Opportunity Fund. Therefore, if you only invest part of your gain in a Qualified Opportunity Fund(s), you can elect to defer tax on only the part of the gain which was invested.

Q. How do I elect to defer my gain on the 2018 sale of the stock?

A.  You may make an election to defer the gain, in whole or in part, when filing your 2018 Federal Income Tax return. That is, you may make the election on the return on which the tax on that gain would be due if you do not defer it. 

Q. I sold some stock on December 15, 2017, and, during the required 180-day period, I invested the amount of the gain in a Qualified Opportunity Fund.  Can I elect to defer tax on that gain?

A. Yes. You make the election on your 2017 return. Attach Form 8949, reporting Information about the sale of your stock. Precise instructions on how to use that form to elect deferral of the gain will be forthcoming shortly. 

Q. Can I still elect to defer tax on that gain if I have already filed my 2017 tax return?

A. Yes, but you will need to file an amended 2017 return, using Form 1040X and attaching Form 8949.

Q. How can I get more information about Opportunity Zones?

A. Over the next few months, the Treasury Department and the Internal Revenue Service will be providing further details, including additional legal guidance, on this new tax benefit. More information will be available at Treasury.gov and IRS.gov.

 

 

City of Vista FAQs 

The following are questions frequently asked of the City of Vista team. 

 

Q. Where is Vista's Opportunity Zone?

A. Vista's Opportunity Zone is a single census tract that includes Downtown Vista. View a map of the Opportunity Zone here. When you review the zoning map, please note that the color designations on the map indicate zoning types. Most inquiries we have received so far are in the Mixed Use (MU) areas which are purple on the map.

Q. What is the benefit to selling a property or business within an Opportunity Zone?

A. Opportunity Zones offer a tax break for investors. If you are selling a property or business within Vista's Opportunity Zone, you will have the opportunity to invest your capital gains into a Qualified Opportunity Fund to invest in an Opportunity Zone property or business. 

Q. Where can I find a Qualified Opportunity Fund? 

A. You can ask your tax attorney, investment firm, or you can create your own Qualified Opportunity Fund. Because the program is in its infancy, funds are still being formed. As the City of Vista learns about funds, we will post them on our VistaOpportunityZone.com website. 

Q. What properties are available for purchase in the Vista Opportunity Zone?

A. Work with a real estate broker to discover properties for sale, or perform an initial search on a real estate search site like Loopnet.com. Costar.com, is a tool that many brokers have access to; inside that tool is a filter where you can search all properties within an Opportunity Zone. 

Q. I want to move my startup to Vista's Opportunity Zone so that my investors can take advantage of the tax incentive. Where should I locate my business?

A. Downtown Vista has a coworking space opening Spring 2019 called the Film Hub. This is a great location for startups to locate if they would like to headquarter their businesses within an Opportunity Zone. There are also a number of smaller office suites as well. If you are a startup looking to locate to Downtown Vista, please contact the Economic Development Department at 760.643.5243 for help finding a space. 

 

Learn more about Vista's Opportunity Zone here.

Have a question not on this list? Email OpportunityZone@CityofVista.com for more information.