ATLANTIC CITY DESIGNATED AS OPPORTUNITY ZONES BY U.S. TREASURY DEPARTMENT

Atlantic City, New Jersey –Atlantic City have been designated as Opportunity Zones, a total of 169 census tracts throughout New Jersey, have been approved by the U.S. Treasury Department. They extend along the beachfront, from the Absecon Inlet to Annapolis Avenue and include the Southeast Inlet, Ducktown, Midtown and parts of the Chelsea neighborhoods. The Opportunity Zone Program is designed to drive long-term capital investments into low-income rural and urban communities.

“I’m pleased the Treasury Department has accepted all 169 sites I proposed last month for designation as Opportunity Zones,” said Governor Murphy. “Now, these cities and towns will have additional means to generate economic growth throughout their respective communities and, more importantly, create economic opportunities for their residents.”

Under federal legislation, eligible Opportunity Zones were census tracts with a poverty rate of 20 percent or a median family income up to 80 percent of the area median. Governor Murphy was authorized to designate up to 25 percent of the state’s eligible low-income census tracts (up to 169 tracts) as Opportunity Zones.

Designated census tracts reflect key economic indicators (e.g. income, unemployment rate, property values) that also take into consideration geographic distribution, access to transit, and the value of existing investments, including those encouraged by state programs and incentives.

“I thank the Governor for designating four census tracts in Atlantic City as Opportunity Zones, which have been approved by the Treasury Department, and could drive unprecedented neighborhood revitalization and businesses opportunities,” said Mayor Frank Gilliam.

The goal is to encourage long-term investment in low-income urban and rural census tracts nationwide. In them, investors can take advantage of unrealized capital gains. Under the law, investors will be able to defer taxes for investing unrealized capital gains into so-called “opportunity funds” that can be tapped for development or business expansion in the designated zones. Those who invest in the funds will also be eligible for substantial tax breaks on those investments.

Specifically, the Opportunity Zone program offers three tax incentives for investing in low-income communities through a qualified Opportunity Fund:

 A temporary deferral of inclusion in taxable income for capital gains reinvested into an Opportunity Fund. The deferred gain must be recognized on the earlier of the date on which the opportunity zone investment is disposed of or December 31, 2026.

 A step-up in basis for capital gains reinvested in an Opportunity Fund. The basis is increased by 10 percent, if the investment in the Opportunity Fund is held by the taxpayer for at least 5 years and by an additional 5 percent if held for at least 7 years, thereby excluding up to 15 percent of the original gain from taxation.

 A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in an Opportunity Fund, if the investment is held for at least 10 years. This exclusion only applies to gains accrued after an investment in an Opportunity Fund.

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