Opportunity Zones were enacted as part of the 2017 tax reform package (Tax Cuts and Jobs Act) to address uneven economic recovery and persistent lack of growth that have left many communities across the country behind. The incentive is designed to encourage long-term, private investments in low-income census tracts by providing a federal tax incentive for taxpayers who reinvest unrealized capital gains into Opportunity Zones. The incentive is deferral, reduction, and potential elimination of certain federal capital gains taxes.
Opportunity Zones are specialized tax mechanisms dedicated to low-income areas and aimed at spurring investment and entrepreneurialism that will ultimately result in business creation and economic prosperity in Opportunity Zone areas and may help address a number of challenges, such as:
- Promoting economic vitality;
- Funding the development of workforce and affordable housing;
- Funding new infrastructure to support population and economic growth;
- Investing in start-up businesses that have potential for rapid increases in scale and the ability to export outside of Maryland;
- Upgrading the capability of existing underutilized assets through capital improvement investments
WHAT ARE THE INCENTIVES THAT ENCOURAGE LONG-TERM INVESTMENT IN LOW-INCOME COMMUNITIES?
The Opportunity Zones program offers investors the following incentives for putting their capital to work in low-income communities:
- A temporary tax deferral for capital gains reinvested in an Opportunity Fund. The deferred gain must be recognized on the earlier of the date on which the opportunity zone investment is sold or December 31, 2026.
- A step-up in basis for capital gains reinvested in an Opportunity Fund. The basis of the original investment is increased by 10% if the investment in the qualified opportunity zone fund is held by the taxpayer for at least 5 years, and by an additional 5% if held for at least 7 years, excluding up to 15% of the original gain from taxation.
- A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in a qualified opportunity zone fund, if the investment is held for at least 10 years. (Note: this exclusion applies to the gains accrued from an investment in an Opportunity Fund, not the original gains).
In Garrett County, Census Tracts 2, 6, and 7 were idenified by Governor Larry Hogan and designated by the U.S. Department of Treasury as Federal Opportunity Zones.
Census Tract 2 is located in Northern Garrett County and includes the County's Northern Garrett Industrial Park and Keyser's Ridge Business Park. Census Tracts 6 and 7 are located in Southern Garrett County. Census Tract 7 includes the County's Southern Garrett Industrial Park and Southern Garrett Business and Technology Park, as well as County-owned property located along Francis Sanders Drive in Mountain Lake Park.
The Keyser's Ridge Business Park has approximately 255 acres available for development. The Southern Garrett Business & Technology Park has a 4.2-acre site available for development. The County also owns three commercial pads located at the end of Francis Sanders Drive just off Maryland Route 135 in Mountain Lake Park, all of which are available for development.
Enterprise Opportunity 360 has created measurement reports for each designated Opportunity Zone.To view those reports, please click on the following links:
- Census Tract 2 Measurement Report
- Census Tract 6 Measurement Report
- Census Tract 7, Measurement Report
- CDFA Opportunity Zones Report: State of the States, Council of Development Finance Agencies
- Opportunity Zone Overview, Enterprise Community
- Frequently Asked Questions, Enterprise Community
- Opportunity Zones Resource Page, Economic Innovation Group
- Opportunity Zone FAQs, Internal Revenue Service
- Opportunity Zones Resource Page, The U.S. Impact Investing Alliance
- Opportunity Zones Resource Page, Council of Development Finance Agencies
- Guiding Principles for Opportunity Zones, Georgetown University's Beeck Center