Opportunity Zones

Background

Opportunity Zones are a community development program established by Congress in the Tax Cuts and Jobs Act of 2017 to encourage long-term investments in low-income urban and rural communities nationwide. The Opportunity Zones program provides a tax incentive for investors to re-invest their unrealized capital gains into Opportunity Funds that are dedicated to investing into Opportunity Zones.

The Arizona Governor’s Office and the Arizona Commerce Authority worked with local governments, tribal communities, and counties to decide which census tracts would be submitted for consideration by the federal government. As of April 9, 2018, all of Arizona’s 168 submitted tracts became officially designated as Opportunity Zones. The Treasury has approved Opportunity Zones in all 50 states, five territories and Washington, D.C. There are two sites in Scottsdale that have been designated as Opportunity Zones.

Eligibility Requirements for a Qualified Investment in an Opportunity Zone

1. The investment must be made via a Qualified Opportunity Fund. An Opportunity Fund is a privately managed investment vehicle organized as a corporation or a partnership for the purpose of investing in qualified Opportunity Zone Businesses. The fund must hold at least 90% of its assets in such property.
2. The investment must be derived from a gain in another investment and transferred into an Opportunity Fund within 180 days of realizing the gain.
   

What is a Qualified Opportunity Zone Business?

A business in which substantially all of the tangible property owned or leased by the business is used in an opportunity zone, with at least 50% of the gross income earned by the business coming from the active conduct of business with an Opportunity Zone.

Additional Resources

If you have additional questions regarding Opportunity Zones, contact the Arizona Commerce Authority at [email protected] and 602-845-1200.