Business Incentives

What is an opportunity zone?
San Juan County in its entirety is an Opportunity Zone. Opportunity Zones (OZ) were enacted as part of the 2017 tax reform package (Tax Cuts and Jobs Act) to address uneven economic recovery and persistent lack of growth that have left many communities across the country behind. In the broadest sense, the newly enacted federal OZ program provides a federal tax incentive for investors to invest in low-income urban and rural communities through favorable treatment of reinvested capital gains and forgiveness of tax on new capital gains.

The Opportunity Fund creates an additional incentive to invest in San Juan County by deferring and possibly eliminating the capital gain tax on long-term investments. Investors can transfer unrealized capital gains into Opportunity Funds putting the full value of the capital gain to work. Some investors have a social investment drive – they want their capital to improve the communities they know and love.

Opportunity Zones help address a number of challenges:

• Promoting economic vitality in parts of the state that have not shared in the general prosperity over the past few years;
• Funding the development of workforce and affordable housing in areas with escalating prices and inventory shortages;
• Funding new infrastructure to support population and economic growth;
• Investing in startup businesses that have potential for rapid increases in scale and the ability to “export” outside the state of Colorado;
• Upgrading the capability of existing underutilized assets through capital improvement investments.

More details regarding the Opportunity Zone can be found at choosecolorado.com/opportunity-zones, or by contacting Region 9 Economic Development District of Southwest Colorado (https://region9edd.org).

Benefit of an Opportunity Zone Investment

1. Temporary Deferral – A deferral of inclusion in taxable income for capital gains invested in Opportunity Funds until December 31, 2026
2. Step-up Basis -Reduction of tax owed on gains if held for 5 years (10%) 2 or 7 years (15%)
3. Permanent Exclusion – Any Growth in the value of the Opportunity Fund itself is tax free if held for 10+ 3 years.