Qualified Opportunity Zones were created by the 2017 Tax Cuts and Jobs Act. Designed to incentivize economic growth and job creation in select communities across the country, an investment in an opportunity zone may be eligible for preferential tax treatment.
H5 Data Centers operates several data centers in opportunity zones:
There are several benefits that investors can be eligible to receive by investing in an Opportunity Zone. First, an investor may elect to defer a capital gain tax (from the sale of stock, etc.) on the amount of gain invested in a Qualified Opportunity Fund on the earlier of (i) the date on which the investment is disposed of, or (ii) December 31, 2026. Further, an investor may be able to get a step-up in basis for capital gains reinvested in an Opportunity Fund (10% if the investment is held at least 5 years and an additional 5% if held for at least 7 years). Finally, there is the potential for permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in an Opportunity Fund if the investment is held for at least 10 years. This exclusion only applies to gains accrued after an investment in an Opportunity Fund.
There are restrictions on the types of investments in which an Opportunity Fund can invest. These investments are called "Qualified Opportunity Zone property," which is defined as any one of the following:
The rules that govern each of these three options, however, the rules for businesses are similar to those of Enterprise Zone Business requirements.
To be eligible to earn the benefits of an investment in an opportunity zone, an eligible corporation or partnership must create a Qualified Opportunity Fund and self-certifying through Form 8996 on its federal income tax return. For more detailed information, one can visit the official website on the Internal Revenue Service (IRS).
OpportunityDb.com created a detailed national map that outlines qualified opportunity zone locations nationally. Such areas were nominated for that designation by each state and ultimately were certified by the Secretary of the U.S. Treasury.