Alabama’s Opportunity Zones Announced by Governor Ivey

Alabama’s Opportunity Zones Announced by Governor Ivey

On 05, Apr, 2018

The Tax Cuts and Jobs Act of 2017 established “Opportunity Zones,” which are certain low-income communities that qualify for incentives to attract investment dollars. The idea behind these zones is to attract investment capital to areas that frequently aren’t recipients of outside investment.

The Act left it up to the states to determine which communities qualified as Opportunity Zones, and last week, Governor Kay Ivey formally submitted Alabama’s choices to the Treasury Department.

What Are the Tax Benefits of Opportunity Zones?

Opportunity Zones provide tax benefits to encourage capital investment, centered on capital gains. There is an estimated $2 trillion in unrealized capital gains on balance sheets throughout the nation. Through the tax advantages afforded by the Act, individuals and corporations can re-invest some or all of their unrealized capital gains into these low-income communities in the hopes of spurring economic development throughout the U.S.

The tax benefits include:

  • Deferring the tax on the capital gain, resulting in zero up-front tax penalty
  • Reducing the overall tax owed on the gain by 10% if the interest in the Opportunity Zone fund is held for five years (an additional 5% can be reduced if they hold the interest for seven or more years)
  • Eliminating the tax owed on the sale of the Opportunity Zone fund interest if the interest is held in the fund for 10 years or more

The hope is that these benefits encourage long-term investment in low-income communities that they can use for economic development, infrastructure, and other vital areas that can contribute to community growth.

What Are Alabama’s Opportunity Zones?

The Opportunity Zones selected by Gov. Ivey are not official until they are certified by the Treasury Department, but the submitted zones include 158 designated zones across all of Alabama’s 67 counties. A map of the designated zones can be found here.

According to the map, much of downtown Birmingham and the communities along and north of the I-20/I-59 corridor are designated Opportunity Zones. Similar zones can be found in each of Alabama’s metropolitan areas, but rural districts are also designated.

More specific information will be made available once the zones are fully certified and become official at a later date.

Alabama CCIM is a chapter of the national CCIM organization, which consists of commercial real estate agents with the prestigious CCIM designation – one of the foremost certifications a CRE agent can receive. Learn more about why CCIM agents are recommended partners for real estate opportunities.

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