Columbus officials met with residents Wednesday to talk about "Opportunity Zones," a federal tax designation that allows investors to avoid capital gains taxes.
The program encourages long-term investment in about 40 Columbus-area census tracts. Five of them are in Franklinton, so city officials tapped experts to show community members how they can take advantage.
Kym Lee from the commercial real estate firm CBRE says Opportunity Zones can opens doors for entrepreneurs as well as property owners.
“It’s a wonderful program from the standpoint that it’s not just trying to revitalize these areas through the purchase of real estate and the improvement of real estate, but it’s also encouraging businesses to locate in those areas,” Lee says.
Under the program, created by the 2017 federal tax overhaul, investors can defer taxes on capital gains if they put those dollars into an Opportunity Zone. Darci Congrove, managing director at the accounting firm GBQ, explains they can also completely avoid taxes on the investment’s earnings if they maintain it long-term.
“If you hold it for at least 10 years, you don’t pay any tax on the appreciation that has happened during the time it’s been invested,” Congrove says. “So complete tax inclusion on the backend is a significant carrot for a lot of people to think about.”
Congrove says the initiative is an improvement on earlier targeted incentives like the New Market Tax Credit.
“This one is much more kind of taxpayer friendly,” Congrove says. “And I think, for that reason, it’s something anyone who’s thinking about relocating a business or making an investment in a zone ought to really have at least a little education on to consider as an option.”
In addition to Franklinton, census tracts in Linden, Milo Grogan, Olde Towne East, and Southside received Opportunity Zone designations. But while the program is billed as a way to drive investment to underprivileged areas, some of the zones in Columbus aren’t lacking in private investment.