Washington - The Trump administration on Wednesday proposed new regulations aimed at making it easier for investors to take advantage of tax breaks for investing in “Opportunity Zones” in low-income areas.
The proposed regulations issued by the Treasury Department seek to clear up questions that were keeping some investors from using the tax incentives.
President Donald Trump, speaking at a White House conference to promote the program, said governors in all 50 states and U.S. territories had designated 8,700 neighborhoods as Opportunity Zones, making these economically depressed areas eligible to be used for the federal tax incentives.
The program was included in the $1.5 trillion tax cut legislation that Trump pushed through Congress in 2017.
The new Opportunity Zones were set up to enable private investors to re-invest profits into designated areas. The investor can get a tax benefit by deferring their capital gains taxes invested in the zones until 2026. They also get a discount of up to 15% on the capital gains profits invested in the zones and pay no capital gains taxes on investments in the zones held for at least 10 years.
However, the government found that use of these benefits was being limited because of concerns over how the tax rules would be interpreted. The proposed regulations unveiled Wednesday are designed to clear up the confusion.
Trump said the tax had been lowered “all the way down to a very big, fat, beautiful number of zero.”
Industry analysts said the new rules should help generate increased interest in the program.
Governors were allowed to choose up to a quarter of their states’ low-income census tracts as Opportunity Zones.