Opportunity Zones

The 2017 federal tax reform bill included provisions creating a new program through which a taxpayer can defer income tax on capital gains. The Opportunity Zone program allows a taxpayer to reinvest proceeds from the sale of an eligible business or property into an Opportunity Fund. This Opportunity Fund, in turn, will invest in one or more businesses or properties located within qualified Opportunity Zones. Qualified Opportunity Zones are low-income areas that have been specifically designated by the state and federal government. In Greenfield, the area north of Jefferson St. has been designated an Opportunity Zone.

By investing in an Opportunity Zone through an Opportunity Fund, a taxpayer can take advantage of up to three benefits, depending on the length of the investment. 

Temporary deferral: A taxpayer can defer any tax owed on capital gains by investing the realized gain in an Opportunity Zone. The tax liability is deferred until December 31, 2026, or at such earlier time that the taxpayer disposes of the Opportunity Zone investment.

Reduction in gain realized through basis adjustment: For capital gains that are reinvested into an Opportunity Zone, the basis of the investment will increase by 10% if the taxpayer holds the investment for at least five years and by an additional five percent if the investment is held by the taxpayer for at least seven years. Therefore, a taxpayer can raise the basis of an investment in an Opportunity Zone by 15% of the amount of the initial investment by holding the investment in the Opportunity Zone for at least seven years.

Exclusion for capital gains on the Opportunity Zone investment: If an investor holds the Opportunity Zone investment for at least 10 years, then the basis of the investment is its fair market value as of the date on which the investment is disposed. Therefore, a taxpayer will generally not be taxed on the gain realized from the disposition of the Opportunity Zone investment after 10 years.
A taxpayer must invest in an Opportunity Fund within 180 days of the disposition of the existing property to be eligible for the tax benefits under the program. 

Nationwide, more than 8,000 Opportunity Zones have been qualified as being eligible to participate in the program, 320 of which are located in Ohio. The northern part of Greenfield is located in Census Tract 39071954400 in Highland County, a certified Opportunity Zone. 

While Opportunity Zones could become useful for Greenfield and other communities in Ohio, caution is advised as the rules for Opportunity Zones are still being developed.

For more information, contact City Manager Todd Wilkin at 937-981-3500 or citymanager@greenfieldohio.net

In addition, Greenfield cooperates fully with the federal and state government and honors any economic incentive programs offered. The Village partners with local employers, Highland County, the Community Improvement Corporation, the Chamber of Commerce and various local organizations seeking to energize and revitalize the local economy. Greenfield Village Council has shown a willingness to negotiate economic incentives for new employers. For more information, contact the City Manager.