On Friday, October 19^th, The U.S. Treasury Department, with assistance from the IRS, released some much-anticipated regulatory guidelines and clarifications regarding the Opportunity Zones Program. The 74-page document offered supplemental clarification to the tax break laws passed late in 2017 which incentivized investors to deploy money in underdeveloped areas.

The original bill left much to question, and investors have already begun launching opportunity funds in these underdeveloped areas to capitalize on potential gains. While there is no deadline for finalization of the addendum guidelines, administration has opened its doors to suggestions to expedite the process.

Among the most notable takeaways from the supplemental guide, according to Bisnow, are possible exceptions to the six-month window for investors to elect to defer capital gains. Once funds have been placed in an opportunity fund, they can remain in that fund for 30 months, if a plan for investment exists and can be audited by the IRS.

Other explored topics included the substantial improvement test which clarifies investor improvements to buildings. The guidelines explain that improvements are based on the value of such buildings instead of requiring investors to match the purchase value of a building. Additionally, the document explains deferred gain, which clarifies that investors may hold qualified assets up to 2047 as opposed to previously stated 2028.

For more information regarding the recent updates to the Opportunity Zones Program, visit www.irs.gov.