True Stories: Hybrid, eNote and RON Implementation

Join expert panelists that will discuss the status of federal legislation, trends in digital adoption and how best to prepare your organization for the next generation of lending processes.

Spruce’s Patrick Burns on innovation in title technology

In the season finale of Housing News season 5, Spruce CEO discusses heightened investor interest in title tech, innovation and fintech adoption.

UWM has a plan to win a war of mortgage attrition

UWM's margins will fall all the way down to 75 to 110 bps. Mat Ishbia says it's the perfect environment to prove that his mortgage firm is truly elite.

Don’t sleep on non-QM products

Now is the perfect time for originators to consider expanding to non-QM products – to grow business, diversify their offerings and to ensure an opportunity to better serve their customers.

InvestmentsMortgageReal Estate

White House announces long-awaited updates to Opportunity Zone rules

Clarifies regulations to encourage more development

The Treasury Department released a second round of rules clarifying requirements for Opportunity Zones recently in a move designed to encourage more development in low-income areas.

The new rules are intended to make it easier for developers looking to take advantage of the tax breaks promised by investing in Opportunity Zones, and clear up some of the confusion that was holding investors back.

Created by the Tax Cut and Jobs Act of 2017, Opportunity Zones seek to spark economic development in distressed areas by encouraging long-term investments through significant tax breaks.

The tax incentive allows investors to defer or minimize taxes on capital gains and, when the investment is remains in play for more than a decade, eliminate capital gains taxes all together.

More than 8,700 communities that are home to approximately 35 million Americans have been designated as Opportunity Zones.

But investors have been hesitant to dive in, with too many questions lingering about how, exactly, the tax breaks work and what types of developments or businesses could qualify.

While HUD estimates that Opportunity Zones could spur as much as $100 billion a year in investments, evidence suggests this potential is far from being realized.

This new wave of regulation is intended to clear up some of the confusion that has held investors back from taking advantage of the program, despite noted interest in the possibilities it could offer.

The new rules specify that investors can share their stakes in Opportunity Zone funds and are permitted to sell start-ups in these areas so long as they reinvest the funds in other qualifying businesses or assets. And they clarify that real estate investors can lease and refinance their properties.

The Treasury’s new guidance also makes it easier for investors looking to fund small business in these low-income areas by approving tax breaks for those exporting goods and services from outside the zone.

One major investor concern revolved around the previous stipulation that in order to qualify, a business must earn 50% of its gross income inside the zone. This left some wondering how tech companies, which might draw customers from outside the zone, fit in.

Now, the Treasury has clarified that a business qualifies if 50% of its employee’s hours or wagers are from inside the zone, or if the property and managers needed to produce 50% of the revenue are from inside the zone.

Treasury Secretary Steven Mnuchin said the administration hopes this new wave of regulation will boost investor activity in these distressed areas.

“We are pleased to issue guidance that provides greater flexibility for communities and investors as we continue to encourage investment and development in Opportunity Zones,” Mnuchin said in statement. “This incentive will foster economic revitalization, create jobs and spur economic growth that will move these communities forward and create a brighter future.”

You can read the full document of revised Opportunity Zone regulations here.

Most Popular Articles

How appraisers value homes in a hot housing market

How do appraisers value a home in a market where prices are escalating rapidly – and where nearly two-thirds of listed homes faced bidding wars in March? HW+ Premium Content

May 13, 2021 By

Latest Articles

Foreclosures down in April as moratorium continues

RealtyTrac and ATTOM Data Solutions found the number of properties with foreclosure filings in April are down 1% month over month and 17% year over year.

May 14, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please