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Opportunity Zones Nevada • Kaya Bromley, JD/MSW
• General Counsel, Community Ventures RE • Founder of the Reno-Sparks OZ Task Force
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What Are Opportunity
Zones?
• Part of 2017 Tax Cuts and Jobs Act • Tim Scott (R-SC) • Cory Booker (D-NJ)
• Encourages long-term investment into low-
income and rural communities
• 8,700 Opportunity Zones across the country
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8,700 Opportunity Zones
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Insert MAP of OZ
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Opportunity Zone Program Offers Three Tax Benefits:
Temporary Deferral
Step-Up in Basis
Permanent Exclusion
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Investor Realizes a Capital Gain
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Example: Investor bought stock for $1M and sold it for $3M. Investor has a $2M Capital Gain. Investor can either:
1.Pay 23.8% tax on the Capital Gain; or 2.Invest it in in an Opportunity Zone and receive tax
incentives.
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Investor Places Gains Into Qualified OZ Fund within 180 Days
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OZ Fund Invests in Real Estate or Business in OZone
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OZ Fund Makes Substantial Improvement To OZ Business
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%
Hold 5 Years – 10% Step-Up in Basis (pay taxes on 90% of cap gains)
Year
5
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%
Hold 7 Years – Additional 5% Step-Up in Basis (pay taxes on 85% of cap gains)
Year
7
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%
Pay Taxes on Original Cap Gains (Less Reductions) Dec. 31, 2026
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%
Hold 10 Years Pay No Capital Gains on Acquired Property
Year
10
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After 5 Years, there is a 10%
reduction in Cap Gains
After 7 Years, there is another 5% reduction in
Cap Gains
After 10 Years, investor sells investment for $1M and pays Zero
Capital Gains upon that sale.
December 31, 2026 – Investor pays deferred capital gains tax less any
reductions
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Additional Points:
• In order to get full 15% reduction of deferred cap gains, investment must be made before end of 2019.
• OZ does not make a bad deal a good deal. It still must cash flow.
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Reno-Sparks Opportunity Zone Task Force
Northern Nevada Opportunity Zone Summit (February 2019)