Oak Harbor Opportunity Zone
What is an Opportunity Zone?
The Tax Cuts and Jobs Act of 2017 was signed into law on December 22, 2017. The Opportunity Zone program was included in that act, which was designed to provide tax incentives to investors who fund businesses in underserved communities.
Investors are able to defer paying taxes on capital gains that are invested in Qualified Opportunity Funds that in turn are invested in distressed communities designated as Opportunity Zones by the governor of each state. Up to 25 percent of the low-income census tracts in each state can be designated as Opportunity Zones.
This federal law gives tax incentives to investors who invest their unrealized capital gains in qualified businesses and real estate located in Opportunity Zones through:
- Temporary deferral of capital gains taxes until 2026
- Tax reduction on capital gains (at 5 and 7 years)
- Elimination of taxes on gains from OZ investments (if held for 10 years)
OZs are an economic development tool designed to spur economic development and job creation in distressed communities by providing tax benefits to investors. An OZ is a designated census tract in which businesses, equipment, and real property can receive investment through Opportunity Funds.
Investors can receive a temporary deferral for capital gains reinvested in an Opportunity Fund, a step-up in basis for capital gains reinvested in an Opportunity Fund if the investment is held for at least five years, and a permanent exclusion from taxable income of capital gains made in the Opportunity Fund.
Island County is very fortunate to have a designated OZ which encompasses the entire census tract 53029970700 located in Oak Harbor. The OZ includes much of downtown and runs up the east side of Hwy 20 just past the Oak Harbor Chamber of Commerce and is west of SE Midway Blvd.
Oak Harbor Opportunity Zone Data Report
For demographic and economic background on Oak Harbor, see this Opportunity Zone Report: Opportunity 360 Measurement Report for Census Tract 9707.