This post originally appeared on the Louisiana Technology Park blog.
id you know that your startup could infuse economic potential in low-income areas while also qualifying for tax incentives? It can thanks to a federal program. “Opportunity zones” are areas that have been selected for economic revitalization. In Louisiana alone 150 tracts have been designated as opportunity zones.
Tax credits are the prime benefit of setting up your small business in one of these zones. Investors are given an opportunity to invest capital gains in a property, and in return the property isn’t taxed beyond the original investment.
For companies needing investment, opportunity zones can provide incentives for funds to invest in areas such as operating businesses, equipment, and real property. For example, if the substantial majority of a company’s property is located within an Opportunity Zone, the company can be eligible for “equity investments” for new or expanding businesses.
Sound too good to be true? James Chappell, executive director of economic competitiveness at Louisiana Economic Development, and Dan Walter, an attorney at Stone Pigman, assure us it isn’t. At Tech Park Academy, Chappell and Walter explained how businesses can qualify for the opportunity zone program and how to leverage it.
What Types of Property Qualify for Opportunity Zones?
The term “property” brings up images of land or real estate, but these aren’t the only types of property that qualify for the opportunity zone program. A business that opens in an opportunity zone qualifies for investment from an “opportunity fund.” Investments can be made in the stock of companies located in opportunity zones, in partnership with interests in qualified businesses and in business properties located in an opportunity zone.
This means that if you establish your startup in an opportunity zone, your organization can qualify for these long-term, top-tier tax credits. The opportunity zone program is beneficial to those who wish to defer and reduce taxes on their capital gains.