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Opportunity Zones Show Scant Impact in the Bronx as Key Deadline Passes

Osullivan Scott Small Bio Banner - Opportunity Zones Show Scant Impact in the Bronx as Key Deadline Passes

When the Qualified Opportunity Zone tax incentive was introduced in 2017 as part of the Tax Cuts and Jobs Act, many believed it would spark new real estate development across the country. However, enthusiasm surrounding the federal program has fizzled, especially in the Bronx. In a recent City Limits article, MWE partner Scott O’Sullivan cites two major reasons why – lack of transparency in how many funds there are and uncertainty that the program will still exist in 2029 when investors have to pay taxes on the money they’ve invested.

 

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This is a problem with the policy that’s not limited to the Bronx, according to Scott O’Sullivan, a partner at accounting and advisory firm Margolin, Winer & Evens (MWE). At the beginning of 2020, MWE conducted a poll of real estate professionals who attended a panel discussion the firm held on Jan.15 in Manhattan. Over 75 percent of attendees said they had not yet invested in a Qualified Opportunity Zone Fund, although 39 percent said they plan to invest in the next six months.

There’s a lot of uncertainty around OZs, O’Sullivan says, particularly for a smaller investor. There’s a lack of transparency in how many qualified opportunity zone funds are out there and which ones are smartest to invest.

“It’s not like shopping for a car, where there are dealerships all along the street ready to tell you what to buy,” O’Sullivan says. “For the big players, the RXR Realty’s of the world, they have the in-house attorneys and the in-house tax people, but for the mom and pops, there’s still a lot of uncertainty to how Qualified Opportunity Zone Funds work.”

Opportunity Zones across the nation have raised more than $6.7 billion since the program started, according to most recent Novogradac Opportunity Funds listing. But there has been some hesitation in investing that money, O’Sullivan says, because there’s no certainty that the program will still exist in 2029, when investors have to pay taxes on the money they’ve invested, or that the capital gains taxes in New York and on a federal level won’t have risen substantially. This is a particularly slow investment period, as investors are waiting to see what happens in the 2020 presidential election, O’Sullivan says. Read More>>>


Read: Qualified Opportunity Zones: Caution or Full Steam Ahead?

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