Created on January 1, 2018, Congress established the Opportunity Zones program to provide tax incentives for investors to re-invest any unrealized capital gains into OZ’s designated by each state. Explore a bit about Opportunity Zones and how Galvanized Holdings is helping investors take advantage of this unique program below.
Galvanized Holdings Funds make investments in properties and businesses within Opportunity Zone areas. Galvanized Holdings only invests in Opportunities that achieve our risk-adjusted return hurdles without the benefit of the tax incentives… Galvanized Holdings views these tax incentives as significant and material, but requires our investments to “make sense” even without the incentives. The end result is that our targeted, after-tax returns are significantly above those of similar investments outside of the OZ’s, potentially by as much as 2x.
The Opportunity Zones Program is based off of the Investing in Opportunity Act, a bipartisan act introduced to the U.S. House in early 2017. The bipartisan act was passed and incorporated as a component program of the Tax Cuts and Jobs Act of 2017. The Investing in Opportunity Act and subsequent Opportunity Zone Program is designed to encourage long-term investments in designated low-income communities across all U.S. States and Territories.
- A program originally proposed by the Economic Innovation Group (“EIG”), a bipartisan public policy organization founded in 2013.
- Governors from each state nominated low income census tracts for inclusion in the Opportunity Zone program. Only a limited number of census tracts were included in order to concentrate the capital investment opportunities to encourage meaningful development to take place.
- Opportunity Zone Funds must invest substantially all their capital in operating businesses, equipment, real property located in these designated census tracts.
Opportunity Zone Funds can accept capital from any realized capital gain provided a few criteria are met:
- Capital Gains can come from anything! The sale of stocks, stock options, a business, real estate, cars, and jewelry all qualify
- The capital gain was realized and invested into a Qualified Opportunity Zone fund within 6 months*
* There are scenarios where an investor has longer than 6-months to contribute dollars to an Opportunity Zone fund, contact us for more details
Census tracts that have been designated by each state and certified by the Treasury as Opportunity Zones. Click below to see a map of all Opportunity Zones in the US.
Opportunity Funds are certified investment vehicles organized as corporations or partnerships for the purpose of investing in qualified Opportunity Zone assets. Funds must hold at least 90% of their assets in Qualified Opportunity Zone Investments.
Opportunity Zone Investments are limited to equity in businesses, real estate, and business assets that are in a Qualified Opportunity Zone.
To encourage investment into these Opportunity Zones, certain incentives are being provided to encourage investors to reinvest their capital gains into these projects. The benefits increase the longer an investor holds the investment.