Wednesday, April 14, 2021
Home   >   Economy   >   Puerto Rico designated an Opportunity Zone under US tax reform

Puerto Rico designated an Opportunity Zone under US tax reform

By on April 9, 2018

SAN JUAN – Gov. Ricardo Rosselló announced Monday that the U.S. Treasury Department and the Internal Revenue Service (IRS) designated Puerto Rico among 18 Opportunity Zones.

The recently enacted federal Tax Cuts and Jobs Act created Opportunity Zones to spur investment in “distressed communities.”

“These zones are created to foster investment in the nation’s disadvantaged communities. New investments in Opportunity Zones can receive preferential tax treatment, which will, in turn, be a boost to our economy,” Rosselló said in a statement.

Under the tax reform law, states, Washington, D.C., and U.S. possessions nominate low-income communities to be designated as Qualified Opportunity Zones, which are eligible for the tax benefit.

U.S. Treasury Secretary, Puerto Rico governor reach agreement on disaster loans

Nominations were required to be submitted by March 21 or a 30-day extension be requested. Treasury had 30 days from the date of submission to designate the nominated zones.

“Our thanks to Treasury Secretary Steve Mnuchin for understanding the need of Puerto Rico to participate in these opportunities zones. Thanks also to the resident commissioner, Jenniffer González, for her work in raising awareness about the economic challenges facing the Island and collaborating so we are included as one of the territories that will benefit from this initiative,” the governor added.

Submissions were approved Monday for American Samoa; Arizona; California; Colorado; Georgia; Idaho; Kentucky; Michigan; Mississippi; Nebraska; New Jersey; Oklahoma; Puerto Rico; South Carolina; South Dakota; Vermont; Virgin Islands; and Wisconsin.

Qualified Opportunity Zones retain this designation for 10 years. Investors can defer tax on any prior gains until no later than Dec. 31, 2026, so long as the gain is reinvested in a Qualified Opportunity Fund, an investment vehicle organized to make investments in Qualified Opportunity Zones, according to Treasury.

Puerto Rico far from meeting U.S. Treasury requirement to receive disaster loans

In addition, if the investor holds the investment in the Opportunity Fund for at least 10 years, the investor would be eligible for an increase in its basis equal to the fair market value of the investment on the date that it is sold.

“I am very excited about the prospects for Opportunity Zones. Attracting needed private investment into these low-income communities will lead to their economic revitalization, and ensure economic growth is experienced throughout the nation,” Mnuchin said in a Treasury release. “The Administration will continue working with States and the private sector to encourage investment and development in Opportunity Zones and other economically disadvantaged areas and boost economic growth and job creation.”

Treasury and the IRS said they plan to issue additional information on Qualified Opportunity Funds to address the certification of Opportunity Funds, which are required to have at least 90 percent of fund assets invested in Opportunity Zones.

 

You must be logged in to post a comment Login