When somebody says to you, name the first state that comes to your mind when you think about the United States. The answer most common is probably California. California is the most populous state in the nation and working hard to create opportunities. Thus, opportunity zones in California.
California is known worldwide for its gorgeous beaches, laid-back population, Los Angeles and its media circus, etc. Everything that the media projects about California indicate that it is a powerful and prosperous state.
Although this is the case for a number of cities not every part of California has had the prosperity that cities like San Francisco and San Diego have. Some counties in California have suffered from businesses leaving and going to lower cost states and from a loss of homeowners from the high cost of living.
Rent in some parts of California has skyrocketed making many people question who has the money to afford it. Not many can afford to live in California and some have moved out of the state looking for reasonable real estate.
This movement has caused many small towns and counties to look like ghost towns. Ghost towns where the population is small and big business have destroyed local commerce leaving people frustrated and worried about their future.
Just look at the Imperial Valley, a small agricultural county bordering Mexico. A few years ago it had the highest unemployment rate in the United States. A county just two hours away from San Diego, one of the most expensive cities in the United States.
You don’t have to look far to see that parts of California are in dire need for investment. The Tax Cuts and Jobs Act might be the hail mary pass that these counties in California need to stay afloat.
What this bill introduced is the promotion of Opportunity Zones to corporations and private investors. Investors in these opportunity zones get to receive big tax reductions making it possible for their business to flourish in California.
The Governor of California and his team had the task to determine which of the counties located in the state they would present to the federal government that would qualify under the opportunity zones program.
Of the 3,516 census tracts in 54 California counties, the governor selected 879. Each census tract compromises about 4,000 California residents meaning that more than 3 million Californians could benefit from the opportunity zone program.
Look at the opportunity zone program as an investment tool that can be utilized to promote the growth of distressed areas. The tax benefits that will be given to investors in these areas are substantial enough to gain ahead in the hypercompetitive market that is located in California.
All types of projects are accepted under this program. Of course, the state is giving preference to huge projects that will create jobs and affordable housing into these communities but any type of business big or small is welcomed to apply.
For an investor to benefit from the program, one must invest in a qualified opportunity fund within 180 days after the sale or exchange of a capital asset. An opportunity fund is the greatest asset you can use if you wish to invest in the program.
An Opportunity fund is an investment vehicle used to invest in businesses located in designated opportunity zones that utilizes the investor’s gains from a prior investment for funding the qualified opportunity fund.
There is a massive waiting period to invest in some parts of California, the state government of California has announced that they will do anything to put your investment into action if it is located in any of the designated opportunity zones.
As of the writing of this article, California tax law has not been updated to accommodate what was determined by the Tax Cuts and Jobs Act, but that is expected to change at the start of next year.
Investors are waiting for these changes to be made as uncertainty is the only thing that is halting them from investing in opportunity zones. Regulations and guidelines need to be made concrete in order for an investment to come into these areas.
After all, we are talking about a lot of money here. California is the most popular state in the United States visited by hundreds of millions of people each year. Investing in these opportunity zones might be one of the smartest financial decisions you will ever make.
I hope you’ve found this article on Opportunity Zones to be helpful. For more information, or for assistance in investing in an Opportunity Zone, please contact us below by filling out the form, Thank you.