A key piece of the sweeping $1.5 trillion tax overhaul passed by Congress in late 2017 was the creation of Opportunity Zones (a.k.a. Trump Opportunity Zones). The program is designed to incentivize private investment and development in economically depressed areas, including some of the country’s poorest communities that have reported a poverty rate of at least 20 percent for three decades, and where family incomes are significantly lower than the area or state median. The Simonini Group has designed and built over five hundred townhomes and one thousand custom homes in greater Charlotte, NC.
According to David Simonini, a renowned advisor and consultant to the group, both folks on the left, the right, and down the middle of the political spectrum should be applauding the Opportunity Zone concept as one that — unlike so many programs that Uncle Sam spearheads — is poised help three key stakeholder groups win big: investors, workers, and families in areas that desperately need a long-term and sustainable financial reset.
To start with, investors in Opportunity Zones are immediately shielded from paying capital gains taxes through to the end of 2026, or when the investment is sold (whichever happens first). Furthermore, capital gains on the initial investment are discounted 15 percent after seven years and are discounted 100 percent after 10 years. David Simonini points out that his home state of North Carolina has identified 252 potential Opportunity Zones from a pool of just over 1,000 potential low-income census areas. The 252 tracts represent over 1.1 million people, and nearly 45,000 families with children in poverty. The U.S. Department of the Treasury is currently in the process of determining how qualified Opportunity Zone funds will be certified, and officials are also working on a timeline for when capital will begin flowing.
An Increase in Employment
Another big winner in the Opportunity Zone program are workers across the country who will be tasked with bringing new developments to life, such as electricians, roofers, insulation workers, plumbers, pipefitters, ironworkers, and the list goes on. David Simonini also notes that there will also be a significant secondary economic benefit to supporting industries and businesses in the community — everything from cars and home furnishings, to restaurants and personal services — which will create even more jobs and support growth in areas that need it most.
David Simonini on Affordable Housing
And the third and ultimately the biggest winner of the Opportunity Zone program is the families who benefit from access to modern, efficient, well-made, and above-all affordable housing in their community. Comments David: “In the past, developers that wanted to help revive economically depressed areas were hamstrung by a lack of investor interest. However, the Opportunity Zone program is changing this. It is an incentive that should make a massive, lasting difference for families on all sides of the political spectrum.”