Frequently Asked Questions

An Opportunity Zone is an economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. The Opportunity Zone program was created under the 2017 Tax Cuts and Jobs Act and is administered by the U.S. Department of Treasury.

Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation of authority to the Internal Revenue Service.

The City of York has five designated Opportunity Zones. Of the 300 census tracts in Pennsylvania designated as Opportunity Zones, 5 are located in the City of York.

These zones provide a variety of opportunities for impact investing in promising development projects and businesses on the cusp of growth.

York's Opportunity Zones are attractive for investment due to several factors:

• A thriving downtown area with ongoing development projects
• A history of industrial innovation and strong workforce
• Strategic location within Pennsylvania
• Community support through partnerships with local organizations
• Potential for long-term capital appreciation

Investing in an Opportunity Zone through a Qualified Opportunity Fund (QOF) can provide three potential tax benefits:

• Temporary deferral of capital gains: Investors can defer tax on prior gains until the earlier of the date on which the investment is sold or December 31, 2026.
• Partial exclusion of prior gains: If the investment is held for at least 5 years, there is a 10% exclusion of the deferred gain. If held for 7 years, the exclusion increases to 15%.
• Exclusion of gains on Opportunity Zone investment: If the investment in the Opportunity Zone is held for at least 10 years, investors may be able to permanently exclude taxable income on the appreciation of the Opportunity Zone investment.

Please consult with a tax professional for specific advice regarding your situation.

A Qualified Opportunity Fund is an investment vehicle that is set up as either a partnership or corporation for investing in eligible property that is located in a Qualified Opportunity Zone. To become a QOF, an eligible corporation or partnership self certifies by filing Form 8996 with its federal income tax return.

Yes, to receive the tax benefits, you must invest capital gains from the sale or exchange of property with an unrelated person into a Qualified Opportunity Fund within 180 days of realizing the gain.

However, anyone can invest in an Opportunity Zone, but the tax benefits specifically apply to those reinvesting capital gains.

To invest in York's Opportunity Zones, you typically need to:

• Identify a Qualified Opportunity Fund that invests in York's Opportunity Zones, or create your own QOF
• Invest your eligible capital gains within 180 days of realizing the gain
• Complete the necessary paperwork and certifications
• Maintain the investment for the required holding period to receive maximum tax benefits

We recommend consulting with financial and legal professionals who specialize in Opportunity Zone investments. The York County Economic Alliance can help connect you with local resources and information.

Qualified Opportunity Zone investments generally include:

• Real estate development and improvements
• Business operations located in Opportunity Zones
• Stock or partnership interests in businesses operating in Opportunity Zones

The investment must meet certain requirements, including that substantially all of the tangible property owned or leased by the business is used in an Opportunity Zone, and that at least 50% of the business's total gross income is derived from the active conduct of a trade or business in the Opportunity Zone.

For more detailed information, we recommend:

• IRS Opportunity Zone FAQ - Official tax guidance
• CDFA Opportunity Zone Basics - Educational resources
• Our Investor Resources page - Local resources and prospectus
• Contact us directly - Speak with our team

The York County Economic Alliance is here to help you learn more about our Opportunity Zones and potential investment opportunities. Our team and community partners can assist with:

• Understanding the Opportunity Zone program
• Identifying investment opportunities
• Connecting with local resources and partners
• Providing information about the local community and market

You can reach us at:

Phone: (717) 846-8879
Email: [email protected]
Address: 1405 Williams Road, York, PA 17402

Or visit our Contact page to send us a message.

Yes, there are ongoing requirements to maintain Opportunity Zone tax benefits:

• The Qualified Opportunity Fund must maintain at least 90% of its assets in Opportunity Zone property
• Real estate investments generally must be substantially improved (the cost of improvements must exceed the basis of the building)
• Business investments must meet ongoing operational requirements
• Regular reporting may be required on Form 8996

It's important to work with qualified professionals to ensure compliance with all requirements.