Hyannis Opportunity Zone
The Opportunity Zone program, created by the federal Tax Cuts and Jobs Act of 2017, provides federal tax benefits to investors who realize capital gains, and invest them within Opportunity Zones through Opportunity Funds.
In April, 2018, Governor Baker nominated 138 census tracts for Opportunity Zone designation, and in May, the U.S. Treasury certified these census tracts. Tax incentives can only be claimed for investments within these specific census tracts.
There are three incentives for investors, which accumulate over the life of the investment. All three are federal incentives, and are non-competitive, so all qualified investors may claim them.
Temporary Deferral: Investors may defer capital gains on income reinvested into Opportunity Funds. The deferred gain must be recognized when the investor exits the fund, or on Dec. 31, 2026, whichever comes earlier.
Step-Up in Basis: If the investor remains within an Opportunity Fund for at least 5 years, their tax liabilities related to the original capital gains are reduced by 10 percent. If the investment is held in the Opportunity Fund for 7 years, this increases by an additional 5 percent, meaning that investors can reduce capital gains liability by 15 percent total.
Permanent Exclusion of Fund Gains: If an investor keeps their investment in an Opportunity Fund for 10 years, any gains from the Opportunity Fund are exempt from taxation.