Opportunity zones are federally-designated parts of the city that qualify for preferential tax treatment for new investment. In Springfield, four U.S. Census Tracts in the downtown area are designated as opportunity zones. The purpose of the designation is to encourage new investment in these areas.
In these designated areas, investors may defer tax on any prior investment gains by in a Qualified Opportunity Fund. Investors may establish a Qualified Opportunity Fund as a corporation or partnership and then invest in Opportunity Zone businesses. To create a fund, investors self-certify while completing their federal income tax return. The investor isn’t required to live, work, or own a business in an Opportunity Zone.
The deferment remains in place until Dec. 31, 2026, or until the investment is sold or exchanged, whichever comes first. If the investment is held for 10 years, the investor becomes eligible for an increase in basis equal to the value of the investment when it’s sold or exchanged.
To verify if your property is within the designated opportunity zone, click here.