The Opportunity Zones program is a federal program designed to spur community investment by providing tax benefits to investors. The City of Mesa has 11 census tracts that have been designated Opportunity Zones by the U.S. Department of the Treasury. The map below highlights these tracts within the city boundaries.
The Arizona Governor’s Office and the Arizona Commerce Authority worked with local governments, tribal communities, and counties to decide which census tracts would be submitted for consideration by the federal government. As of April 9, 2018, all of Arizona’s 168 submitted tracts became officially designated as Opportunity Zones.
For tax benefits to be received by an Opportunity Zone investor, two qualifications must be met:
- The investment must be made via a Qualified Opportunity Fund. An Opportunity Fund is an investment vehicle that is set up as either a partnership or corporation for investing in eligible property that is located in an Opportunity Zone.
- The investment must be derived from a gain in another investment and transferred into an Opportunity Fund within 180 days of realizing the gain.
This then allows for the investors to receive reductions on capital gains taxes relative to the years of their investment in an Opportunity Zone after 5 years.
- If the investment is held for a minimum of five years the taxable amount of the capital gains reinvested is reduced by 10%.
- After holding the investment for at least 10 years the taxable amount of capital gains reinvested is reduced by 15% and no tax is owed on the appreciation.