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Opportunity Zones

Opportunity Knocks: We'll help you open the door.

But what exactly IS an Opportunity Zone? Don’t worry; we’ll break it down for you.

Possible tax deferral, exclusion, and tax-free appreciation? It sounds too good to be true, doesn’t it? It’s not. Opportunity Zones are changing the real estate and start-up business landscape, and offer compelling tax benefits.

What are Opportunity Zones? 

Opportunity Zones are census tracts in economically distressed communities that qualify for the Opportunity Zone program per the 2017 Tax Cuts and Jobs Act. More than 8,700 Opportunity Zones have been designated across the U.S., Puerto Rico, and four additional U.S. territories.

Why were Opportunity Zones created? 

The Investing in Opportunity Act, part of the 2017 Tax Cuts and Jobs Act, was established to bring financial investments to distressed communities through housing development and new businesses.

Who can benefit from Opportunity Zones?

The following individuals and businesses, among others, may be able to benefit from Opportunity Zones:

  • Owners of land inside Opportunity Zones
  • Owners of buildings inside of Opportunity Zones
  • Developers with existing or potential projects inside Opportunity Zones
  • Investment Funds looking to invest in real estate or start-up businesses located inside of Opportunity Zones
  • Business owners looking to start or expand businesses inside an Opportunity Zone
  • Investors with unrealized or realized capital gains from sales of businesses, securities, or real estate
How do you invest in an Opportunity Zone? 

Investments in Opportunity Zones must be made through an investment vehicle certified as a Qualified Opportunity Fund (QOF). These QOFs can be either closely held, or more akin to traditional private equity investment funds.

What are the tax benefits of investing in an Opportunity Zone? 

Taxes on capital gains invested within 180 days into a QOF are deferred until the earlier of when the investment is sold or December 31, 2026.

  • If an investment is held for 5 years before December 31, 2026, then 10% of the gain is excluded permanently.
  • If the investment is held for 7 years, then 15% of the gain is excluded permanently.
  • And if the investment is held for more than 10 years, appreciation on the initial investment can be tax free.

It’s important to note that this is a federal tax provision. States and localities may not all follow the federal rule.

Opportunities await. We’ll help you navigate the waters.

The ins and outs of the new Opportunity Zone code section are incredibly complex and still evolving. We’re staying on top of developments—and our extensive experience working with real estate developers and private equity funds makes Perkins uniquely qualified to be an Opportunity Zone advisor of choice.

We’re always happy to chat, so please reach out to a member of our leadership team if you would like to start a conversation.

Opportunity Zone Leadership

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