The Treasury Department and Internal Revenue Service (IRS) on April 12 issued proposed regulations impacting the 24-month extension of the 31-month Opportunity Zone working-capital safe harbor triggered by Federally declared disasters. While prior regulations required taxpayers benefiting from the extension to make investments consistent with their original plan, the government now recognizes that this may be infeasible. Accordingly, taxpayers may develop a new written plan to deploy capital so long as they do so prior to 120 days after the incident period applicable to the disaster.
Additionally, the proposed regulations provide requirements that certain foreign investors and partnerships must meet to benefit from Opportunity Zone tax benefits. The guidance also establishes how such taxpayers may eliminate or reduce withholding tax on transfers of assets.
Notably, this comes after a January 2021 IRS announcement that provided additional relief regarding Opportunity Zones in the form of deadline relief applicable to several aspects of the incentive.
NMHC will keep members apprised of any related IRS actions. To learn more about past actions and NMHC advocacy work, please visit the NMHC Opportunity Zones webpage.
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