Opportunity Zones were enacted into federal law through the Tax Cuts and Jobs Act of 2017 to spur private investment in distressed communities across the United States. The program provides a federal tax incentive for investors, who invest in real estate projects and operating businesses located in designated low-income communities through deferral and partial tax reductions of reinvested capital gains, and forgiveness of tax on new capital gains.
The City of Baltimore is committed to taking full advantage of Opportunity Zones and is proactively working with investors, developers, businesses, communities, and other stakeholders to provide information and coordination assistance.
The City has a designated Opportunity Zones coordinator to help provide information and guide efforts in Baltimore. The Baltimore Opportunity Zones (BOZ) Coordinator is focusing on the following activities:
- Collecting and sharing information about Baltimore’s Opportunity Zones and projects
- Developing an information exchange of investors, developers, businesses, community partners and others interested in Opportunity Zones
- Monitoring and tracking Opportunity Fund investments
- Conducting community outreach about Opportunity Zones
If you have any questions or would like more information about Baltimore City’s efforts to attract investment to Opportunity Zones, please contact the BOZ Coordinator, Ben Seigel, at OZones@BaltimoreDevelopment.com.
Opportunity Zones in Baltimore City
Of the 149 Census Tracts in Maryland designated as Opportunity Zones by the U.S. Treasury, 42 are in Baltimore City. For a list of Baltimore’s 42 Opportunity Zone Census Tracts, please click here.
To see if a specific address is located in an Opportunity Zone, click here and enter the address in the search bar.
Investors interested in taking advantage of Opportunity Zone tax benefit, must invest realized capital gains into a Qualified Opportunity Fund within 180 days that the capital gains are realized. The tax benefits associated with a Qualified Opportunity Fund are three fold:
- Deferral on the original capital gains taxes invested in a Qualified Opportunity Fund until 2026 (or the sale of the investment)
- Reduction of capital gains tax on the original capital gain investment by 10% basis points after a 5-year hold and 15% basis points after a 7-year hold
- Tax-free appreciation on the original capital gains if an investment is held for at least 10 years; the investor pays no capital gains taxes on appreciation in the investment above the original capital gains investment.
These resources provide additional information:
- Fundrise Opportunity Fund Calculator
- Novogradac and Company Opportunity Zone Resource Center for Investors
Real Estate and Operating Businesses
Qualified Opportunity Funds can invest in eligible commercial, residential, mixed-used real estate properties and operating businesses located in Opportunity Zones. Certain types of operating businesses located in Opportunity Zones are not eligible for investment, including: golf courses, country clubs, gambling establishments, racetracks, liquor stores, massage parlors, and suntan and hot tub facilities.
If you have a real estate or operating business project you would like for potential investors to know about, please email us at OZones@BaltimoreDevelopment.com.
Here are other resources for project managers:
Opportunity Zones offer states, cities, and communities a unique resource for working with local, regional, and national partners to attract new investment in their economic development projects. These resources provide useful ideas and guidance for communities:
- How Cities Can Maximize Opportunity Zones (Nowak Metro Finance Lab)
- How States Can Maximize Opportunity Zones (The Governance Project)
- Equitable Investment in Opportunity Zones
Opportunity Zones Resource Center
There are a number of online resources available for learning more about Opportunity Zones. Here is a sample:
U.S. Department of Treasury Resources
- Frequently Asked Questions
- Proposed regulations released Oct 19, 2018
- Qualified Opportunity Fund Self Certification Form 8996 (draft)
Disclaimer: BDC does not specifically endorse or take responsibility for any information or resources posted here, and no information included should be considered legal or investment advice.