To amend the Internal Revenue Code of 1986 to modify the rules for investments in qualified opportunity funds, and for other purposes.
Sponsored By: Representative Cherfilus-McCormick
Introduced
Summary
Extends Opportunity Zone deadlines and adds firm rules for affordable residential projects to steer investments toward lower-income renters. The bill would lengthen key tax windows for Qualified Opportunity Funds and require new rent, occupancy, and notice limits for projects that claim favorable tax treatment.
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- Families: Renters in qualified opportunity zone rental projects would face a maximum rent increase of 3% per year and must receive at least 60 days' advance notice of any rent hike. These rules aim to protect tenants in projects receiving Opportunity Zone investment.
- Investors: Investors would have a longer time to invest under Opportunity Zone tax rules because the zone designation period would reach the 20th calendar year and the election period would extend through December 31, 2036. The bill also changes when gains must be included depending on whether investments occur before or after enactment.
- Developers and projects: A residential project would only qualify if at least 30% of occupied units serve households at or below 100% of area median income for most of the fund's holding period. Investors get certain basis increases only if at least 50% of occupied units meet the income test when gain is recognized.
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Bill Overview
Analyzed Economic Effects
3 provisions identified: 2 benefits, 0 costs, 1 mixed.
Longer Opportunity Zone designation period
If enacted, the bill would extend how long an area stays a qualified opportunity zone from the 10th calendar year to the 20th calendar year. This change would apply to zones already designated when the bill is enacted. If enacted, the tax incentives tied to those zone designations would be available for a longer period.
Later deadline to invest deferred gains
If enacted, the bill would let investors elect to put deferred gains into qualified opportunity funds through December 31, 2036 instead of December 31, 2026. Amounts invested before this bill's enactment would still be included in income on December 31, 2026. Amounts invested after enactment but before January 1, 2037 would be included on December 31, 2036.
New rules for Opportunity Fund housing
If enacted, the bill would change tax rules for Opportunity Funds that own rental housing. A rental project would count as qualified property only if it meets the business-property test, at least 30% of occupied units are rented to people at or below 100% of area median income during most of the fund's holding period, rent increases are capped at 3% per year, and tenants get at least 60 days' notice of any increase. Investors would get larger basis step-up rates for projects that meet rules, but the investor's basis increase would only apply if at least 50% of occupied units meet the income test when the investor recognizes gain. If enacted, two basis-adjustment percentages would be raised for qualifying residential projects: one change would substitute 15% for 10%, and another would substitute 7% for 5%.
Sponsors & CoSponsors
Sponsor
Cherfilus-McCormick
FL • D
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
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