Opportunity Zones were created under the 2017 Federal Investing in Opportunities Act and are designed to encourage economic growth and job creation in economically distressed communities. To accomplish this, Opportunity Zones offer investors three tax incentives:

1. Temporary deferral: An investor can defer capital gains taxes until 2026 by investing and holding unrealized gains in a Qualified Opportunity Fund, a partnership or corporation organized to invest in designated Opportunity Zones.
2. Tax reduction: The original amount of capital gains on which an investor has to pay deferred taxes is reduced by 10% if the Opportunity Fund investment is held for more than 5 years and another 5% if held for more than 7 years, for a total of 15%.
3. An exemption: Any capital gains on investments made through an Opportunity Fund accrue tax-free as long as the investor holds them for at least 10 years. For investments held longer than 10 years and upon a sale or disposition of the investment, the investor is allowed to elect the basis in the investment to quality to the fair market value of the investment.

To qualify for these incentives, investments must be made through a Qualified Opportunity Fund. Check the U.S. Treasury website for details on how to become certified as a Qualified Opportunity Fund.

Tigard’s Opportunity Zones shown in blue (above)

Qualifying Investments

Because the Opportunity Zone program is intended to stimulate positive growth within designated communities, there are restrictions on the types of investments in which an Opportunity Fund can invest. The following investment options are available to Opportunity Funds:

• Partnership interests in businesses that operate in a qualified Opportunity Zone.
• Stock ownership in businesses that conduct most or all of their operations in a qualified Opportunity Zone.
• Property such as real estate located within a qualified Opportunity Zone:
  • Construction of new buildings / substantial improvement of existing unused buildings.
  • If an Opportunity Fund invests in the improvement of an existing building, it must invest more in the improvement of the building than it paid to buy the building.

Oregon Opportunity Zone Initiative

The Oregon Opportunity Zone Initiative is a system where local community and economic development stakeholders can efficiently work with businesses and developers to present investment-ready projects to Opportunity Zone investors. This platform places investment proposals from businesses and project sponsors in front of Opportunity Zone investors.

Tigard’s Opportunity Zones

We have three distinct Opportunity Zones, detailed below.