Instead, the program provides a deferral or, in some instances, exclusion from capital gains tax for certain investments made through Opportunity Funds and is designed to provide the most upside to those who hold their investment for 10 years. This tool is market driven and does not provide upfront cash relief.
Here’s how it works: The federal government developed this incentive in 2018 to catalyze development – residential, commercial and business – in economically-distressed communities that wouldn’t normally attract new investment. Developers who invest in one of 70 designated areas in Detroit through an Opportunity Fund may be eligible for a deferment, or in some instances an exclusion, from capital gains tax.
