On April 17, the Internal Revenue Service (“IRS”) issued new proposed regulations to address a number of the outstanding questions and ambiguities pertaining to the Opportunity Zone program. The hope is that the new IRS guidance will spur significant Opportunity Zone investments that have been on the sidelines waiting for additional clarity. The proposed regulations answer major questions regarding original use and substantial improvement of tangible property and vacant land, requirements for being considered a Qualified Opportunity Zone Business (“QOZB”), the treatment of leased property, income inclusion events and distributions, and how long a Qualified Opportunity Fund (“QOF”) has to deploy capital in Qualified Opportunity Zone Property to satisfy the 90 percent asset test.

There are still outstanding issues and questions, including the tax treatment of interim gains of a QOF during an investor’s holding period and QOF compliance reporting, to name a few. However, the IRS’s most recent regulation proposal should facilitate additional activity and deal flow in the Opportunity Zone space. Here are a number of key highlights from the voluminous regulation release:

Real Estate Development

  • The regulations specify that the original use and substantial improvement requirements do not apply to vacant land. Accordingly, any development of vacant property should qualify for QOF investment.
  • Additionally, structures and buildings that have been vacant for 5 years will satisfy the original use requirement and will not require substantial improvements.

Continue Reading Much-Needed Clarity Finally Arrives for Reaching the Land of OZ

This week, the New Jersey Division of Taxation issued key guidance on the Opportunity Zone program. The guidance provides that New Jersey will conform to federal tax rules when it comes to the Opportunity Zone tax benefits for gross income and corporation business tax purposes. Accordingly, New Jersey taxpayers will have the opportunity to take advantage of the deferral and reduction of current capital gains, while realizing future capital gains on a Qualified Opportunity Fund investment tax-free. A copy of the guidance can be found here.

As seen on: ROI-NJ.com
By Tom Bergeron

The city of Newark has one of the top locations in the country for investors looking to take advantage of the new Opportunity Zone Program, according to a national study released Thursday morning.

The LOCUS National Opportunity Zone Ranking Report ranked a census tract in downtown Newark in a tie for sixth place among the top Opportunity Zones for Smart Growth Potential, in a ranking of nearly 8,000 tracts.

In addition, a tract in Newark ranked fourth overall in locations deemed to be the top Social Equity and Vulnerable Places with High Smart Growth Potential, meaning the city not only could handle the investment, it would do so without hurting the existing population.

> Link to Full Article on ROI-NJ.com

Enough time has passed since the IRS issued its first substantive round of draft regulations and guidance on the federal Opportunity Zone program for certain Qualified Opportunity Fund (“QOF”) managers to begin their capital raise.  Some Funds are still working through structuring concepts and documentation, while many others remain on the sidelines in light of the outstanding questions and potential issues that remain for Opportunity Zone investments and projects.  While the remaining issues and areas of confusion should not be taken lightly, there is also a bit of a race against the clock element in play due to the December 31, 2019 deadline for an investor to invest in a QOF and receive the maximum level of tax benefits afforded under the program.

Continue Reading Start Raising Capital or Wait for Additional Guidance?

As seen on: ROI-NJ.com
By Tom Bergeron

The panelists at the Opportunity Zone program were a bit bombastic when it came time to describe the potential the program has in low-income areas.

“Too good to be true,” said one.

“We’ve never seen anything like this,” said another.

Ted Zangari, head of the Real Estate Department at Sills Cummis & Gross and the person credited for bringing the Rutgers Center for Real Estate event together Monday in New Brunswick, summed it up this way:

“If ever there was an idea that challenged the notion that if something is too good to be true it probably is, it would be the Opportunity Zone program,” he said.

But for whom — and for where?

> Link to Full Article on ROI-NJ.com

On October 19, 2018 the Internal Revenue Service (“IRS”) unveiled its long-awaited guidance on the Opportunity Zone program. The IRS released proposed regulations which have a 60-day notice and comment period before being finalized. Although the regulations may not be finalized, they can be relied on by investors and Fund managers. The IRS also released additional guidance in the form of Revenue Ruling 2018-29, which addresses the “substantial improvement” requirement as applied to real property.

Continue Reading Opportunity Zone Guidance Released with Some Answers and Some Outstanding Questions

In an exclusive audio interview, Newark real estate attorney Ted Zangari says investors need to start identifying appreciated assets quickly so that they can engage in Opportunity Zone transactions before the end of 2019 to gain the maximum tax advantages.


As seen on: GlobeSt.com
By: Steve Lubetkin

With Developers waiting to learn about tax treatment of Opportunity Zone investments in New Jersey may get some answers on Monday when Gov. Phil Murphy is expected to join US Sen. Cory Booker on stage at an Opportunity Zones conference being sponsored by the Rutgers Center for Real Estate at the Hyatt Regency hotel here, according to Ted Zangari, chair of the real estate practice at Sills Cummis & Gross, a commercial law firm with New Jersey offices in Newark and Princeton.

News of Gov. Murphy’s decision to participate in the panel…

> Link to Full Article on GlobeSt.com

> Link to Audio Podcast

When the Tax Cuts and Jobs Act was being negotiated and considered by Congress at the end of 2017, most practitioners, developers, and business owners were trying to assess its impacts on the mortgage interest limitation, the cap on the state and local tax deduction, 1031 exchanges, immediate expensing of business assets, and other key issues. In that flurry of negotiation and analysis, a powerful federal tax incentive was added to the law that could lead to a vast transfer of wealth while also funding the revitalization of some of the country’s most distressed areas. That new powerful tool is the Opportunity Zone program.

The basic goal of the Opportunity Zone program is to unlock unrealized capital gains being held by companies and individuals and direct that capital towards businesses and projects in certain distressed areas. This is accomplished by incentivizing prospective investors to sell appreciated property and reinvest the gains into qualified Opportunity Zone projects through offering attractive tax incentives—three tax incentives to be precise.

Continue Reading Opportunity Zones: What is All the Fuss About?