Created as part of the Tax Cuts and Jobs Act of 2017, Opportunity Zones are designed to promote economic development and improve the outcomes of low-income communities. The U.S. Department of Treasury has certified 55 Opportunity Zones across West Virginia, including six locations in Jefferson County, that are now eligible for the new federal tax incentive designed to encourage private investors to make capital investments in these areas. Qualified Opportunity Zones retain the designation for 10 years.
Jefferson County Opportunity Zones
In Jefferson County, the designated census tracts for Opportunity Zones are:
- 972300 – area northwest of Ranson to the Berkeley County line including Leetown, Shenandoah Junction, and Jefferson Orchards
- 972401 – Old Town Ranson area
- 972402 – area north of Ranson toward Shenandoah Junction along W.Va. Route 9 and the railroad tracks, including the Burr Business Park
- 972505 – downtown central Charles Town, Hollywood Casino, and area between U.S. Route 340 and Old Route 340
- 972506 – Somerset Plaza and commercial corridor east of Charles Town and Langlet Farm/WVU Medicine area
- 972800 – west and south of Ranson and Charles Town to the Jefferson/Berkeley/Clark County lines, including Sunnyside Business Park with exception of Huntfield/Tuscawilla/Locust Hill
Tax Benefits to Investing in Opportunity Zones
Normally, when private investors and corporations sell assets, the proceeds from such sales would be taxed as a capital gain. This new law provides these investors with an alternative by allowing them to invest capital gains into Opportunity Funds/Zones and defer federal taxes on the profit temporarily. The longer the investment is retained, the greater the capital gains tax relief becomes.
For an investor to realize the tax benefits of investing in Opportunity Zones, an investor’s capital gains must be invested in a Qualified Opportunity Fund with 180 days of the sale or exchange that generated the gains. Investors are then eligible to defer the tax on their capital gains until the earlier of: the date the Opportunity Fund investment is sold or December 31, 2026.
The capital gains invested in a Qualified Opportunity Fund are eligible for partial tax forgiveness if the investment is held in a Qualified Opportunity Fund for at least five years. After five years, only 90 percent of the original gain is taxed. If the investment is held for seven years, only 85 percent of the original gain is taxed. If an investment in a Qualified Opportunity Fund is held for 10 years, any tax on the appreciation of that investment is forgiven.
The following are the individual Opportunity Zones in Jefferson County: