Opportunity Zone

Two areas in downtown Owensboro, on the west side, have been marked as Opportunity Zones by the U.S Treasury Department. 

In December 2017, Congress passed legislation that would incentivize investments made within lower income census tracts. 

These Zones will be marketed to domestic and international investors.  They are seen as enhanced business zones by the Kentucky Cabinet for Economic Development and marketed to attract national and international interests.

Owensboro’s Opportunity Zone stretches from Cedar Street west to Walnut Street forming one zone and most of the City’s west side riverfront sector north to the Owensboro Riveport forms the other.

How do investors invest in an Opportunity Zone?

  • Investments in these zones must be made through Qualified Opportunity Funds.  Those are investment vehicles set up as either a partnership or corporation for investing in eligible property located in one or more Opportunity Zone.  Investors must contribute only money to Opportunity Funds that have been generated through prior investments.
  • To become a Qualified Opportunity Fund, an eligible taxpayer self-certifies (thus, no approval or action by the IRS is required).  To self-certify, a taxpayer merely completes a form (will be available summer 2018) and attaches it to the taxpayer’s federal income tax return for the taxable year.  The taxpayer’s return must be filed timely, taking extensions into account.
  • More details will be provided as the Treasury Department and the IRS provide further details, including additional legal guidance, on this new incentive.
  • Additional information can be found at Treasury.gov, IRS.gov and KYOZ.com

What are the advantages of investing in an Opportunity Zone?

  • Temporary deferral
  • Step-up in basis for gains reinvested
  • Permanent exclusion from taxable income of capital gains

Illustrative example of how the incentive works.