Bring Down Your Taxes. Raise Up Neighborhoods in Need.
You see them on the news or glimpse them as you drive along the freeway. Neglected neighborhoods, full of boarded-up businesses and run-down apartment blocks.
You may have wondered, “What can bring an area like that back to life?” The answer is twofold: Opportunity Zones — and you. If you’re an investor with capital gains, there’s a federal law that defers, reduces, even eliminates what you can be taxed on if you reinvest your gains in distressed neighborhoods.
It’s a win-win situation. And Barnes Dennig’s real estate tax professionals can guide you through the process.
What Are Opportunity Zones?
The 2017 Tax Cuts and Jobs Act (TCJA) created Qualified Opportunity Zones (or QOZs) in communities across the country. Investors can secure tax advantages by using their capital gains to help fund economic development and job creation in those distressed areas.
The capital gains that are eligible for the incentive can come from:
- Estates and trusts (and their beneficiaries)
- Pass-through entities like S corporations (and their shareholders)
How we help
Whether you’re an investor or a developer, Barnes Dennig can help you understand, comply with, and maximize the benefits of this law. We do this in all kinds of ways, including:
- Offering guidance on tax regulations for QOZ investments
- Identifying QOZ properties and choosing the right ones for you
- Creating a timeline to ensure you meet mandatory deadlines
- Crafting the language for legal documents, such as partnership agreements
- Identifying tax return elections
Some things to keep in mind
About tax deferrals and gain elimination:
- The capital gain you invest will be deferred until 2026 or until the sale of the QOF investment —whichever comes first.
- For QOFs held for 5 years, your original capital gain will be reduced by 10%.
- For QOFs held for 7 years, your original capital gain will be reduced by 15%.
- For QOFs held for 10 years, the appreciation on your invested capital gain will be tax-free.
- For Ohio QOF investments over $250,000, the state has a tax credit equal to 10% of your investment.
About Qualified Opportunity Zone Fund (QOFs):
- Capital gains must be reinvested within 180 days of the capital gain event. Additional time may be available for some 2019 – 2020 capital gains.
- Can be a partnership or C Corporation, including LLCs taxed as either type
About Qualified Opportunity Zone Business Property:
- Three potential investments – QOZ Partnership or Corporation or the QOF’s purchase of QOZ Business Property
Why work with Barnes Dennig?
We’ve earned a reputation for thought leadership on Opportunity Zones by:
Talking about them
Barnes Dennig professionals have hosted events on this topic and delivered keynote speeches about it for:
- The Port of Greater Cincinnati Development Authority
- Construction Financial Management Association(CFMA)
- Rosselot Financial
Watch our on-demand webinar: Opportunity Zone Impact Investing: How OZ Investments Provide More than Just Tax Savings
Writing about them
Get a taste of our knowledge and insights about Opportunity Zones through our blog posts:
- Ohio Opportunity Zone income tax credit legislation introduced
- Opportunity Zones: The Sleeper Hit of Tax Reform
- Ohio Senate takes steps to further Opportunity Zone Investment
Staying up to date on them
Our CPA and Senior Manager Jennifer Wesselman is a Top 25 Influencer on the national Opportunity Zone Expo website. And Barnes Dennig’s membership in the Opportunity Investment Consortium of Indiana keeps us in the loop about changes that might benefit our clients.
Want to know how QOZs could benefit you?
Reach out to us today.