County’s 3 Opportunity Zones offer investment incentives
Substantial income tax breaks are available for investors who put their money in parts of Columbia and Marion County.
The state has designated three census tracts in the county as federal “Opportunity Zones,” which are part of the new Republican tax cut package.
The zones are designed to spur growth in struggling areas. Companies can avoid paying taxes on their capital gains by investing into those regions.
“You can tell everybody that we are open for investment in Columbia,” Lori Watts, president of the Marion County Development Partnership, said while announcing the program to the Columbia Board of Aldermen recently. “It works for purchasing and renovation of buildings for Main Street type businesses, for industry and for residential investment.”
Many of Columbia’s main business areas are included in the zone, including the U.S. 98 bypass and downtown.
America’s growth in recent years has been centered in major urban centers, and this plan is designed to help struggling rural areas.
U.S. Sen. Tim Scott, R-S.C., got the Opportunity Zones included in the huge 2017 tax cut bill.
“If it’s successful, we’ll look back 10 years from now and say this was one of the most important parts of the tax bill, and one we didn’t talk nearly enough about,” Kevin Hassett, the chairman of President Trump’s Council of Economic Advisers, was quoted as saying by the New York Times.
Eligible census tracts must have a poverty rate of at least 20 percent or median family income that is less than 80 percent of the state average.
And of the total number of census tracts meeting the qualifications, each state can only designate 25 percent as Opportunity Zones. In April Gov. Phil Bryant chose three of Marion County’s five qualifying census tracts.
“That is a powerful incentive for people who have investment money to reinvest it in their communities,” Lori Watts said. “They will get a lot of tax breaks for reinvesting capital gains.”
Watts said several neighboring counties including Lawrence and Walthall counties did not receive any of the opportunity zone designations they applied for.
The three census tracts in Marion County have poverty rates ranging from 25.9 percent to 34.6 percent.
“It does contain the Main Street District and the historic district and out toward the industryplex and the training school property,” Watts said. “It also included down Lumberton Road and South High School Avenue and that area. An adjacent tract that comes into the southeastern corner of the county was also designated. It picks up along the south side on U.S. 98 and continues all the way to the county line in the southeast corner. They left out the north section of the city, and I don’t know why. There was a tract off Lafayette that went toward the four-way stop and that was an area did not get the designation. They designated the northwest corner of the county.”
Mayor Justin McKenzie spoke about the program as the Board continued its discussions with Watts.
“One of the big things to remember is that it is a tool for private investors,” he said. “It is trying to stimulate economic development and growth in our community. We want to make it attractive for someone to come to our area and invest. That’s ultimately where this will apply. It’s not funding; it’s a tax deferment. It is trying to attract investment money into the designated areas.”
How it works
Here’s how the new Opportunity Zones work, according to an IRS explanation sheet and the text of the federal tax cut bill:
Say an investor sells property and makes a profit. Normally that profit, called a capital gain, would be subject to taxes. But in this case, if the investor rolls those capital gains into a “Qualified Opportunity Fund,” he can defer paying taxes on them. Those funds are set up to do economic development projects within Opportunity Zones, such as the ones in Columbia.
And if he keeps the money invested for at least 10 years, he avoids paying the taxes on capital gains from the Opportunity Fund project. n
