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McMaster submits 135 opportunity zone nominations

Staff Report //March 23, 2018//

McMaster submits 135 opportunity zone nominations

Staff Report //March 23, 2018//

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Gov. Henry McMaster submitted 135 S.C. opportunity zones to the U.S. Department of the Treasury on Friday as part of a federal community development program aimed at revitalizing low-income areas.

Opportunity zones, established by Congress as part of the Tax Cuts and Jobs Act of 2017, were sponsored by Sens. Tim Scott, R-S.C., and Cory Booker, D-N.J. The program is designed to encourage long-term private investment in low-income communities by providing tax incentives for the reinvestment of unrealized capital gains.

Investors can roll existing capital gains into opportunity funds with no upfront tax bill and can defer their first bill until as late as Dec. 31, 2026. Investments held in the fund for at least 10 years are not taxed for capital gains. A five-year holding increases the rolled-over capital gains basis by 10%, while a seven-year holding increases the basis an additional 5%.

The Treasury Department determined 538 of South Carolina’s 1,097 census tracts to be distressed or severely distressed communities. The opportunity zone program allows state governors to designate 25% of eligible communities for inclusion.

Each S.C. county has at least one designated opportunity zone, with rural and urban areas represented. Designated communities were required to demonstrate an ability to attract private investment, and weight was given to local input and areas in acute need of revitalization, such as Fairfield County after the abandonment of the V.C. Summer nuclear project.

The opportunity zones are expected to be approved by the Treasury Department within the next 30 days, according to a news release.

“We’re confident that we’ve been able to implement a collaborative approach to designating these communities, with input from local governments across the state, that will eventually mean further private investment and economic growth in the areas that need it most,” McMaster said in a statement.