What Are Opportunity Zones? Why Invest in Them?

Not sure what an opportunity zone is? Well, you’re not alone. But, you might want to find out because they’re the wave of the future for socially-conscious and forward-thinking investors. Opportunity zones are defined as “economically distressed communities where investments, under certain conditions, may be eligible for preferential tax treatment.” This definition was created by the Tax Cuts and Jobs Act of 2017 and has the potential to facilitate growth in both the economy and communities across the country. There are currently more than 8,700 opportunity zones throughout the United States.

“In addition to the societal benefits of opportunity zones, it can also boost returns for investors through unprecedented tax incentives,” said Robert Hutchins, President and Managing Director of Ellavoz Impact Capital. “These benefits aren’t normally available to real estate investors and shouldn’t be overlooked.”

While these tax incentives are substantial and competitive, they also have the considerable benefit of helping areas that need it most. A rare combination in the field of investment.

As more and more investors are looking for ways to not only do business but to do good, they are shifting their capital from traditional investing to opportunity zone investing.

But, before an investor makes a move to capitalize on opportunity zones, they must understand the big picture and focus on the future of not only the equity but of their impact.

Some of the substantial benefits of opportunity zone investing include:

  • An investment risk that is diversified, because it is uncorrelated to the public markets.
  • A deferral until 2026 of the federal tax and many state taxes on the original capital gain.
  • A 10 percent reduction of deferred tax if the investment is held for five years.
  • A tax exclusion on the entire gain from the investment in the opportunity fund is held by the taxpayer for at least 10 years.

About Ellavoz Impact Capital 

Ellavoz Impact Capital is the management company for the Ellavoz Shared Values Opportunity Fund and the Ellavoz Impact Angel Network. The Angel Network represents high net worth individuals, family offices, and businesses that believe innovative opportunity fund investing in underserved communities will result in positive financial and social impact returns.