Opportunity Zones

Overview

There are 72 “Opportunity Zones” in Connecticut created to attract private investment to improve economic growth, community wealth, business development, housing opportunities and infrastructure while creating significant jobs in the most challenged but promising areas of Connecticut. Connecticut’s Opportunity Zones typically present vibrant downtowns, robust transit options, robust housing demand, and a growing and diverse private sector of entrepreneurs and innovative companies. Connecticut is confident that our Opportunity Zones will be appealing to a wide range of investors.


About Opportunity Zones

Opportunity Zones provide substantial tax benefits to investors who invest in “opportunity funds.” The opportunity fund model encourages investors to pool their resources, increasing the scale of investments being made in historically underserved areas. These funds may invest equity into  businesses, real estate or infrastructure. Capital gains invested via an opportunity fund as equity in qualified projects or businesses will defer capital gains taxes on the initial gains invested and will be exempt from capital gains on the investment in the Opportunity Zone Fund.

Eligibility

Opportunity Funds can only obtain the tax benefits by investing in Opportunity Zones. The Opportunity Zones designated in Connecticut are shown in this map: View a Map of Connecticut’s Opportunity Zones.

Qualifying investments may include equity in nearly any real estate or business that investors find attractive, as long as they are substantially within an Opportunity Zone. The successful investments will be those that are most likely to appreciate over the 10 year investment hold period. If an equity investment in a qualified business or project must be liquidated before the 10-year investment period is over, the opportunity fund can reinvest in another qualified business or project.

Real estate projects should either be new development or an existing building in need of substantial renovation. Qualified real estate investments can include multi-family and single family housing, commercial, retail, industrial and mixed-use developments.

Business investments can include any growing business that is willing to take equity investors either as control or non-control positions. Businesses should operate within the Opportunity Zone (at least 70% of their operations) and derive most of their revenues from sales within Opportunity Zones (at least 50% of their sales).

Energy efficiency and renewable energy projects can also qualify and may derive their appreciation value from reliable long-term cash flow.

In exchange for their investments, opportunity fund investors are able to decrease their federal tax burden through the preferential treatment of capital gains.

Establishing an Opportunity Zone Fund is straightforward and is described on the https://www.irs.gov/newsroom/opportunity-zones-frequently-asked-questions. Anyone can form an Opportunity Zone Fund.

The list of active Opportunity Zone Funds is building and is found by a web search. Funds are being established all the time including several in Connecticut.

Contact

For more information contact Maya Loewenberg at (860) 500-2455 or maya.loewenberg@ct.gov.