The U.S. Government Accountability Office (GAO) today released a report on the opportunity zone (OZs) incentive with two major recommendations: that the Internal Revenue Service (IRS) address risks caused by limited data availability and take steps to mitigate those risks, and that the IRS research compliance risks of high-wealth investors and large partnership qualified opportunity funds (QOFs). GAO found that on average, the census tracts selected and designated as OZs had higher poverty and a greater share of non-White populations than eligible, but not selected, tracts, and that these differences were statistically significant.
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.
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