Capital Deferment Opportunity Zones Created in Mississippi: Big Opportunity for Houston
Created by Congress in the Tax Cuts and Jobs Act of 2017, a new federal tax program seeks to incentivize investors with unrealized capital gains to invest in under potentiated communities. This is great news for Mississippi, which has designated 100 new zones which will allow for this new investment program.
Estimates place the value of unrealized capital gains at between three and six trillion dollars. The new Opportunity Zones will allow investors to redeploy this capital without the immediate tax penalty of the traditional tax structure. Furthermore, investments into Opportunity Zones allow for tax free capital appreciation of those invested funds. And, unlike the typical 1031 transfer, funds are not limited to like kind investments – opening heavily discounted diversification strategies for investors.
“We see this as a great opportunity for our community,” says Sean Johnson, director of the Chickasaw Development Foundation in Houston, Mississippi.
“Houston is a sleepy town now, but it wasn’t always. The town took a hit with NAFTA and globalization in general and has been struggling to recover. We’ve lost some industry and we’ve lost some population, but the structure necessary for growth remains in place.”
Johnson says that he hopes the tax breaks, along with the city’s low real estate costs, will help lure investors.
“We’ve already had a few folks sniffing around for commercial opportunities due to the new program, so we’re very excited about the possibilities and opportunities.”
Houston is one of one hundred Opportunity Zones in the state, and one of eight thousand similarly designated zones throughout the nation and US territories. Some other zones in Mississippi include Oxford, Tupelo, Greenwood, Meridian, Bay St. Louis and Laurel.
The program is self-certifying and there are no minimum or maximum investment amounts. Investors may create their own Opportunity Zone funds and invest directly into their own projects within the zones, or they may invest into or alongside established funds.
When considering any investment, it’s important to speak with a financial adviser or certified accountant before acting.
The program is still new to many financial professionals, many of whom are just now learning about it. However, a quick google search will reveal a number of firms who are up and running with projects created because of the program.
For more information about the program, the Mississippi Development Authority has created a web page at https://www.mississippi.org/opportunityzone/.