Novogradac partner John Sciarretti announced at the Novogradac 2021 Fall Opportunity Zones Conference in Cleveland this week that qualified opportunity funds (QOFs) tracked by Novogradac raised $20.28 billion by the end of September, a jump of nearly 16% over three months. Novogradac is tracking 1,243 QOFs, of which 909 report a specific equity amount–an amount that is $2.76 billion more than the total at the end of June. While the equity amount increased by 15.8% over that period, the number of QOFs reporting an equity raise increased by 6.6%.
Legislation introduced in the Ohio state Senate would temporarily increase the statewide cap for the state historic tax credit (HTC) and the state opportunity zone (OZ) investment tax credit and make other modifications. S.B. 225 would increase the annual state HTC cap to $120 million for fiscal years 2022 and 2023 from the current $60 million cap and increase the transaction cap to $10 million from the current $5 million for fiscal years 2021, 2022 and 2023. The legislation would also increase the state HTC from 25% to 35% for HTC properties in communities with populations less than 71,000 according to the 2020 census. S.B. 225 would also increase the statewide OZ investment credit cap from $50 million to $100 million for the period of July 1, 2021, to June 30, 2023, reverting to $50 million per biennium after that.
Rep. Michelle Steele, R-California, introduced legislation to extend the opportunity zones (OZ) incentive by creating subsequent rounds of OZ designation, starting Jan. 1, 2027, with further designations every 10 years. The Growth and Opportunity Act (H.R. 4608) would therefore extend the date by which investors in qualified opportunity funds (QOFs) can exclude 10% of gains after holding the investment for five years from Dec. 31, 2026. Another bill introduced in the House would extend the tax deferral date by until Dec. 31, 2029.
Qualified opportunity funds (QOFs) tracked by Novogradac raised $17.52 billion in equity as of midyear, according to the Novogradac Opportunity Zones Investment Report: Data Through June 30, 2021, which was released today. The semiannual report includes information on the geographic and investment-type focus of more than 1,000 QOFs and includes the top 20 states and top 40 cities for planned investment, as well as the number of QOFs in each of several ranges of equity raised.
The Internal Revenue Service will publish in Thursday’s Federal Register corrections and correcting amendments to the final regulation for the opportunity zones (OZ) incentive released in December 2019 and published in the Federal Register in January 2020. The corrections include a clarification that startup businesses using the working capital safe harbor for property that would be nonqualified financial property except for the working capital safe harbor, are deemed to meet the 70% tangible property test during the working capital safe harbor period, while retaining the rule that the property is not treated as qualified OZ business property for any purpose. The correcting amendments change the language of both the preamble to the final regulations and the final regulations. The amendments are effective Thursday and are applicable on or after Jan. 13, 2020. The Opportunity Zones Working Group had requested the IRS address the issues included in the corrections.
Budget legislation signed by Ohio Gov. Mike DeWine includes a provision increasing the state opportunity zones (OZ) tax credit taxpayer cap per fiscal biennium to $2 million. The budget legislation retained the statewide cap of $50 million per fiscal biennium, but doubled the amount a single taxpayer can claim. The 10% credit is for investments in qualified opportunity funds that hold 100% of their invested assets in Ohio.
Rep. Jim Hagedorn, R-Minnesota, introduced legislation to increase the number of opportunity zones (OZs) and extend the OZ tax deferral date by three years. The Expanding Opportunity Zones Act of 2021 (H.R. 4177) would boost the percentage of low-income communities that each state that can designate as OZs from 25% to 30%, which would create an estimated 950 additional OZs across the nation.
The board of governors of the Federal Reserve System (Fed) and Federal Deposit Insurance Corporation (FDIC) released the list of distressed or underserved nonmetropolitan middle-income geographies for 2021, which makes revitalization or stabilization activities in those areas eligible for Community Reinvestment Act (CRA) consideration. The designations reflect local economic conditions, including unemployment, poverty and population changes. The Fed and FDIC continue to apply a one-year lag period for areas listed in 2020 that are no longer designated as distressed or underserved, making revitalization or stabilization activities in those geographies eligible for CRA condensation for 12 months after the publication of the current list.
https://www.novoco.com/resource-centers/opportunity-zone-resource-center/guidance/novogradac-opportunity-zones-mapping-toolThe Internal Revenue Service (IRS) today issued Announcement 2021-10, confirming that the boundaries of designated qualified opportunity zones (OZs) were established at the time they were designated, are unaffected by 2020 decennial census changes and are not subject to change.
Qualified opportunity funds (QOFs) tracked by Novogradac reported an increase of more than $1 billion in investment since the end of 2020. QOFs tracked by Novogradac reported an equity raise of $16.34 billion for investment in opportunity zones (OZs) as of April 12, up from $15.16 billion reported at the end of 2020. Novogradac is now tracking 1,002 QOFs, of which 708 reported a dollar amount of equity raised. A blogpost by Michael Novogradac looks deeper at the most recent data, including the average equity raise and the types of investment that are most common.
Legislation introduced in the South Carolina General Assembly would create a tax credit for investment in new projects in opportunity zones (OZs), as well as other OZ investments. H.B. 3131 would create a 25% credit for the first $50,000 of OZ investment costs for taxpayers and would make recipients of federal low-income housing tax credits (LIHTCs) to automatically receive state LIHTC equal to the federal credit if their development is in an OZ. The legislation also includes a credit for each job created, with the amount varying depending on the economic status of the county; and a tax rebate for grocery stores in food deserts.
New York Gov. Andrew Cuomo today signed budget legislation that includes a provision to take the state out of conformity with the Internal Revenue Code concerning the opportunity zones (OZ) incentive. The provision was included in a series of bills to make up the state’s budget for 2021-2022 fiscal year. For taxable years beginning Jan. 1, 2021, the OZ gain excludable from federal taxes is not excludable in New York state taxes.
The Internal Revenue Service (IRS) will publish in Wednesday’s Federal Register a notice of proposed rulemaking for the opportunity zones (OZ) incentive that provides flexibility in the 24-month extension of the working capital safe harbor in the case of federally declared disaster areas. The proposed rule would allow qualified OZ businesses to revise or replace the original written designation and written plan and remain eligible for the safe harbor, provided that the remaining working capital assets are expended within the original 31-month period, increased by the 24 additional months provided.
The Novogradac Opportunity Zones Mapping Tool has been updated to indicate whether there are boundary changes to qualified OZ census tracts (QOZs) due to the 2020 Census, a change that will necessitate IRS guidance, since eligibility for the OZ incentive is based on 2010 census tract boundaries.
The federal opportunity zones (OZ) incentive would be extended until the end of 2028 under legislation introduced in the House of Representatives. The Opportunity Zones Extension Act of 2021 would allow taxpayers to defer taxes on capital gains invested in qualified opportunity funds (QOFs) through 2028, two years later than currently allowed.
Equity raised by qualified opportunity funds (QOFs) tracked by Novogradac surpassed $15 billion at the end of 2020, according to Novogradac Opportunity Zones Investment Report: Data Through Dec. 31, 2020, released today. Novogradac is tracking 927 QOFs, 659 of which reported a specific amount of equity raised for investment in opportunity zones (OZs). The $15.16 billion in equity reported is $3.11 billion more than the figure at the end of August 2020.
A private letter ruling (PLR) by the Internal Revenue Service allowed a taxpayer to become a qualified opportunity fund (QOF) despite missing a registration deadline due to its tax advisor failing to attach IRS Form 8996 to the taxpayer’s return. Upon discovery of the oversight, the taxpayer directed the tax advisor to promptly submit a request for relief.
Certain Louisiana Angel Investor Tax Credit investments made in opportunity zones (OZs) are eligible for an enhanced tax credit of 35%, effective today. Louisiana S. 24 made the change to the Angel Investor Tax Credit program, providing the enhanced credit for investments made in businesses in OZs that are certified as Louisiana Entrepreneurial Businesses.
The Internal Revenue Service (IRS) today issued a notice providing relief to qualified opportunity funds (QOFs) and their investors due to the COVID-19 pandemic, extending opportunity zones (OZ) relief provided by an earlier notice. Notice 2021-10 provides relief for the 180-day investment requirement, the 30-month substantial improvement period, 90% investment standard for QOFs, working capital safe harbor for OZ businesses and 12-month reinvestment period for QOFs.
The Internal Revenue Service (IRS) today announced that it is sending letters to inform taxpayers that they may need to take additional actions related to qualified opportunity funds (QOFs). The IRS said that taxpayers who attached a Form 8996 to a tax return or indicated that they did so may receive a letter that indicates that if they intend to self-certify as a QOF, they may need to take additional action.
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