Coatesville Qualified Opportunity Zones
Created in 2017 through the Federal Tax Cuts and Jobs Act, the QOZ program is designed to spur economic development and job creation in distressed communities by providing tax benefits to investors who invest eligible capitalgains into these communities.
The Governor of each state was able to designate 25% of their state's low- to moderate-income census tracts as Qualified Opportunity Zones.
In 2018, Governor Tom Wolf designated all four census tracts in the City of Coatesville as Qualified Opportunity Zones.
How it works:
The QOZ tax incentive works by allowing investors to roll over capital gains from other investments into Qualified Opportunity Funds (QOFs), which invest their assets in real estate and/or business equity within Qualified Opportunity Zones.
There are three primary tax benefits investors can reap:
1. Deferral of capital gain income- Investors can roll over capital gains from other investments into a QOF and
defer tax due on the gain until they exit the fund or December 31, 2026, whichever is first.
2. Reduce tax liability- Capital gains that remain invested in a QOF for 5 years (must invest by December 31, 2021) receive a step up in basis of 10%, and an additional 5% for investments held for 7 years (must invest by December 31, 2019).
3. Tax-free investment returns- Any capital gains that accrue from the QOF investment are taxfree if the investment is held in the fund for ten years or more.
-Rachael Griffith, Fels Institute of Government, University of Pennsylvania