New York State is taking part in the federal Opportunity Zone community development program, which was formed as part of the Tax Cuts and Jobs Act of 2017. The program incentivizes developers to bring their projects to economically distressed areas.
Empire State Development joined New York State Homes and Community Renewal, New York State Department of State and the state’s Regional Economic Development Councils in recommending 514 tracts of land throughout the state for designation as Opportunity Zones. These designations must be approved by the U.S. Treasury Department.
Of the 514 tracts, 35 are in Manhattan, 124 are in Brooklyn, 75 in the Bronx, and 63 in Queens. Already, some developers are beginning to build in these Opportunity Zones. Real Estate Weekly reported that Hello Living, a Brooklyn-based developer, purchased a property in Inwood to build 272 apartment units; of that amount, 30% would be reserved as affordable housing. In addition, the project calls for the development of 50,000 square feet of retail.
Under the program, developers who invest in Opportunity Zones are eligible for federal tax benefits by realizing capital gains and investing their liquid capital into designated Opportunity Funds rather than putting that money into assets (these Opportunity Funds are set up either as partnerships or corporations for the purpose of investing in qualified Opportunity Zones). By doing so, they will be able to defer and exclude capital gains from taxable state income, accord to Empire State Development.
If you are looking to invest in an Opportunity Zone property, contact the experienced real estate attorneys at Wingate, Kearney & Cullen, LLP. The Firm has experience in representing clients in the purchase and sale of real property, as well as the transfer of life estates as part of our clients’ tax planning to defer or eliminate capital gains taxes on the sale of real property. For more information or to schedule a consultation, call (718) 852-5900.