Federal Opportunity Zones
Opportunity Zones are a part of a community and economic development program established by Congress as a part of the Tax Cuts and Jobs Act of 2017. They are designed to encourage long-term private investment in low-income and/or rural communities. This program provides a federal tax incentive for taxpayers who reinvest unrealized capital gains into Opportunity Funds, which are specialized vehicles dedicated to investing in Opportunity Zones.
The zones themselves are comprised of lower-income community census tracts and designated by governors in every state. Maryland has designated 149 Opportunity Zones across the state. Qualifying Zones are based on the 2011-2015 American Community Survey.
Note: Complete regulations governing the program have yet to be issued by the U.S. Treasury Department and Internal Revenue Service (IRS). More information will become available in the coming months at Treasury.gov and IRS.gov.
Calvert County Opportunity Zones
The Patuxent Business Park is located in a federally designated Opportunity Zone.
Opportunity Zones Incentives
The Opportunity Zones program offers investors the following incentives for putting their capital to work in these communities:
- Investors can roll existing capital gains into Opportunity Funds with no up-front tax bill.
- A 5-year holding increases the rolled-over capital gains basis by 10 percent; a 7-year holding increases the rolled-over capital gain investment basis by another 5 percent for a total of 15 percent.
- Investors can defer their original tax bill until Dec. 31, 2026, at the latest, or until they sell their Opportunity Fund investments, if earlier.
- Opportunity Fund investments held in the fund for at least 10 years are not taxed for capital gains.