Investing in Opportunity Zones

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You probably don’t spend your days thinking about Opportunity Zones, but this podcast makes it clear why we should all be paying attention. In short: Opportunity Zones are low-income communities nominated by state governors and backed by the US Department of Treasury. The 2017 tax overhaul established the Opportunity Zone program and created tax incentives for investors to inject capital into these zones by financing new projects (think: real estate and other new businesses). 

In a recent episode of Exchanges at Goldman Sachs, Margaret Anadu, head of Goldman Sachs Urban Investment Group, outlines the details of the program, how the tax incentives work and what it means for investors.

From Anadu’s perspective, “I think we’re having this really important national conversation today about income inequality and the haves and the have-nots, and there are views on all sides. But I think one thing we can all agree on is that everyone should have the opportunity to grow and succeed...And there's no way we’re going to change the situation in low-income communities and bring back all of that opportunity without the investment in private capital.”

You’ll need to listen to the full episode to understand the complexity of the program – and the broader issues at play – but for now, here are six figures that stood out. 

Note: all figures below are taken from when this podcast was originally published on May 22, 2019.

By the numbers: Opportunity Zones

  • 8,700. The number of Opportunity Zones across the country. Opportunity Zones exist in every state and territory. This map can show you exactly where they are. 
  • 10 percent. The percentage of the US population that lives in an opportunity zone.  
  • 52 million. The number of people who live in a distressed community – neighborhoods with low graduation rates, shrinking job markets and high vacancies. Many distressed communities have been selected as Opportunity Zones. 
  • 8 percent. The percentage of adults in selected Opportunity Zones that aren’t working.  While US unemployment has been at a record lows (3.7% at the writing of this article), it remains high in these communities.
  • 10 years. The amount of time investors need to hold their investment in an Opportunity Zone if they want to qualify for one of the program’s major tax incentives. It requires that Qualified Opportunity Fund investors hold their investment in a zone for 10 years if they want to eliminate tax on capital gains.  
  • $6 billion. The amount Goldman Sachs’ Urban Investment Group has invested in Opportunity Zones to date.

This article is for informational purposes only and is not a substitute for individualized professional advice. Individuals should consult their own tax advisor for matters specific to their own taxes and nothing communicated to you herein should be considered tax advice. This article was prepared by and approved by Marcus by Goldman Sachs, but does not reflect the institutional opinions of Goldman Sachs Bank USA, Goldman Sachs Group, Inc. or any of their affiliates, subsidiaries or division. Goldman Sachs Bank USA does not provide any financial, economic, legal, accounting, tax or other recommendation in this article. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice.  Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA or any its affiliates. Neither Goldman Sachs Bank USA nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in this document and any liability therefore is expressly disclaimed.