Opportunity Zones


In Wisconsin

Opportunity Zones

Opportunity Zones are low income census tracts nominated by governors and certified by the U.S. Department of the Treasury into which investors can now put capital to work financing new projects and enterprises in exchange for certain federal capital gains tax advantages. The country now has over 8,700 Opportunity Zones in every state and territory.


120

7 of 7

39%
Opportunity Zones in the
State of Wisconsin
Congressional Districts Rural Areas

44

60

2
Counties with Opportunity Zones Municipalities Tribal Reservations

Wisconsin’s Opportunity Zones Designated Census Tracts*

Use this interactive map to look up locations across the state to see if they fall within a designated Opportunity Zone census tract.

Download Maps by Congressional District (Zip File)

*Geographical Data provided by CDFI

Opportunity Zones in Wisconsin

Locate in Wisconsin Tool

The Locate in Wisconsin tool is sponsored by Wisconsin Economic Development Corporation (WEDC). It is an online platform which allows you to search properties and businesses in communities across the state, including those with Opportunity Zones.

Click here to learn more about projects in opportunity zones sites 

How Do Opportunity Zones Work?

Three Primary Investor Benefits

Opportunity Zones offer investors the following incentives for putting their capital to work in low-income communities:

How OZs Work
A Temporary Deferral
A temporary tax deferral for capital gains reinvested in an Opportunity Fund. The deferred gain must be recognized on the earlier of the date on which the opportunity zone investment is sold or December 31, 2026.
A Step-up in Basis
A step-up in basis for capital gains reinvested in an Opportunity Fund. The basis of the original investment is increased by 10% if the investment in the qualified opportunity zone fund is held by the taxpayer for at least 5 years, and by an additional 5% if held for at least 7 years, excluding up to 15% of the original gain from taxation.
A permanent exclusion from taxable income of capital gains
A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in a qualified opportunity zone fund, if the investment is held for at least 10 years. (Note: this exclusion applies to the gains accrued from an investment in an Opportunity Fund, not the original gains).

Opportunity Zone Funds

OZ Flow

Qualified Opportunity Funds (QOF) are new private sector investment vehicles that invest at least 90 percent of their capital in qualifying assets in Opportunity Zones. U.S. investors currently hold trillions of dollars in unrealized capital gains  in stocks and mutual funds alone— a significant untapped resource for economic development. Funds will enable a broad array of investors to pool their resources in Opportunity Zones, increasing the scale of investments going to underserved areas.

Investment types

Qualified Opportunity Funds can be invested in a variety of investment types, including:

How OZs Work

OZ Timeline

Although the first deadline for the Opportunity Zones Initiative occurs at the end of this year, December 31, 2019, investors are still able to take advantage of other Initiative incentives.

OZ Timeline

Source: Economic Innovation Group


How Communities Can Engage

Local leaders and stakeholders play a crucial role in guiding Opportunity Zone investments in their communities. Often, an Opportunity Zone strategy can be melded into a community’s existing long range planning and development goals. WHEDA frequently presents at summits, workshops, and conferences across the state on how communities can leverage the Opportunity Zone Initiative.

View WHEDA's Presentation  The Governance Project Municipal Toolkit  LISC Opportunity Zone Playbook 

  • PHASE 1

    START WITH A VISION

  • PHASE 2

    IDENTIFY ZONE-SPECIFIC NEEDS

  • PHASE 3

    CATALOG COMMUNITY RESOURCE

  • PHASE 4

    MAP LOCAL STAKEHOLDER ECOSYSTEM

  • PHASE 5

    SELECT PRIORITY PROJECTS

  • PHASE 6

    DEVELOP FINANCING TOOLS TO REFINE PRIORITIES

  • PHASE 7

    PROGRESS PRIORITY PROJECTS INTO DEALS

Source: The Governance Project

Frequently Asked Questions


Opportunity Zones are economically-distressed communities, designated by states and territories and certified by the U.S. Treasury Department, in which certain types of investments may be eligible for preferential tax treatment. The tax incentive is designed to spur economic development and job creation in distressed communities by providing these tax benefits to investors. Effective June 14, 2018, Treasury certified Opportunity Zones of all states, territories and the District of Columbia. Opportunity Zone designations certified by Treasury will remain in effect until December 31, 2028.

A Qualified Opportunity Fund is any investment vehicle organized as a corporation or partnership with the specific purpose of investing in Opportunity Zone assets. The fund must hold at least 90% of its assets in qualifying Opportunity Zones property.

Any taxpaying individual or entity can create an Opportunity Fund, through a self-certification process. A form (expected to be released in the summer of 2018) is submitted with the taxpayer's federal income tax return for the taxable year.

Opportunity Funds can invest in any Qualified Opportunity Zone property, including stocks, partnership interest or business property (so long as property use commences with the fund, or if the fund makes significant improvements to the qualifying property).

,Or will it be sufficient if the majority of the business’ assets are located in Opportunity Zone tracts (property, equipment, etc.)? For example, would a trucking business based in an Opportunity Zone, but serving a whole region, qualify for Opportunity Fund financing?

To qualify as an eligible Opportunity Zone Business, a business must demonstrate that substantially all its tangible business property is located within a Qualified Opportunity Zone. No such stipulations have been made regarding the service area of the Opportunity Zone Business in the statute, but this may nonetheless be an item that the IRS chooses to address in future guidance or regulations.

There is no recapture risk, but an opportunity fund that fails to meet the 90% asset requirement of the fund will be required to pay a penalty for each month it fails to meet the requirement. The penalty is not designed to be catastrophic, but rather, to ensure that funds stay within the zone’s parameters. Once an asset no longer qualifies, there will be a period of time in which the asset can be disposed of before incurring penalties.

Yes, so long as an Opportunity Fund has at least 90% of its assets in Qualified Opportunity Zone property, the fund may invest in as many qualified tracts as desired.

No, an investor must invest in an Opportunity Zone business through a Qualified Opportunity Fund in order to qualify for associated tax incentives.

The tax incentive itself does not expire in 2026. Investors in Opportunity Funds that hold investments for at least 10 years will still be able to take advantage of the favorable tax treatment of gains related to the investments into Opportunity Funds, even if realized after 2026.

There are no minimum or maximum investments required by Opportunity Zone legislation.

We anticipate a broad range of investor return expectations. On one end of the spectrum, Opportunity Funds may raise capital from socially responsible, high net worth investors that would otherwise be contributing to donor-advised funds with a principal preservation focus and a low return expectation (e.g., less than 5%). On the other end of the spectrum are private equity fund investors that are expecting double-digit returns based on the risk of providing equity capital to real estate or business investments. In the middle are preferred equity investment models with 6-10% annualized return expectations.

This timeframe will be determined in the IRS rule making process. Based on the legislation, an Opportunity Fund may need to have 90% of its capital invested in Opportunity Zone Property within the first six months of the taxable year of the Opportunity Fund. There may be some timing relief in the rule making to enable a 12-month investment window. Also, to receive the tax benefits, the investor must deploy their capital into an Opportunity Fund within six months of realizing the capital gain being invested.

For example, could a developer that does business in an Opportunity Zone create an Opportunity Fund for a specific project?

Yes, given the expected ease of certifying an Opportunity Fund and the timing constraints of investing the capital in Opportunity Zone Property, we anticipate that single-asset funds will be utilized.

As of today, we think Opportunity Zone investments could be combined with Housing Tax Credits (either state or federal) and New Markets Tax Credit, though we won’t know for sure until the Treasury Department releases its guidance.

Source: LISC

Other Resources