Recently the Greater FM EDC held an Opportunity Zone 101 presentation with experts from the State of Minnesota and North Dakota along with the Council of Development Finance Agencies (CDFA) and Kilbourne Group.
We received a lot of information on a fairly in depth federal program. So we took that info and created the following FAQ to break it down and provide a useful guide to the program.
What are Federal Opportunity Zones (OZ)?
According to the CDFA, OZ’s are low-income census tracts that offer investor tax benefits in return for investing their capital gains into projects within a designated zone, whether that be real estate or a company project.
How many OZ’s are there?
Every state was eligible to designate 25% of their eligible tracts as OZ’s. The U.S. has more than 8,700 OZ’s. North Dakota has 25 with five in Fargo and Minnesota has 128 with one in Moorhead.
Where can I find more information about the specific locations in Cass and Clay Counties?
The following links give you more information about specific locations in Minnesota and North Dakota.
What is a qualified opportunity fund?
A qualified opportunity fund in a partnership or corporation for investing in eligible property/projects within an OZ. At least 90% of a qualified opportunity fund’s assets much be held in an OZ.
What are the benefits to investors?
According to the CDFA, capital gains reinvested into a qualified opportunity zone within 180 days from date of sale or exchange creating the gains are eligible for:
- 100% deferral on taxable gain until earlier of sale of investment in QOF or December 31, 2026.
- 10% reduction of capital gain invested in QOF if held for at least 5 years.
- 15% reduction of capital gain invested in QOF if held for at least 7 years.
- 100% reduction of capital gain from QOF investment if held for at least 10 years.
The federal Opportunity Zone legislation is one of the most meaningful economic development programs to come along in decades. To continue supporting the education of this program, the EDC is sponsoring a follow up program that will be led by Emerging Prairie on Wednesday, July 24. Be on the lookout for more information on this upcoming event but don’t hesitate to contact the EDC office with questions you may have about Opportunity Zones.