NEWBERRY — There is a tract in Newberry County that has been designated an Opportunity Zone, but you might be thinking, what exactly is an Opportunity Zone?
An Opportunity Zone is a new community development program established by Congress as a part of the Tax Cuts and Job Act of 2017, they are designed to encourage long-term private investments in low-income communities. This program provides a federal tax incentive for taxpayers who reinvest unrealized capital gains into “Opportunity Funds,” which are specialized vehicles dedicated to investing in low-income areas called “Opportunity Zones.”
“What a good business opportunity we have, this is a little known part of the tax code that I credit Senator Tim Scott for putting in there,” said U.S. Rep. Ralph Norman during a press conference to promote Newberry’s Opportunity Zone. “Our Fifth District has ten Opportunity Zones.”
The zones are to be comprised of low-income community census tracts and designated by governors in every state. South Carolina designated 25% of qualifying census tracts as an Opportunity Zone. Qualifying Zones are based on the 2011-15 American Community Survey.
The Opportunity Zone in Newberry goes from Nance Street to the interstate. To see the full area, visit scopportunityzone.com. Part of Downtown Newberry will be included in Newberry’s Opportunity Zone. To which Norman said Main Street is the heart and soul of any community.
“What Tim Scott thought of, going across this state, going by the census tracts, low-income, or you can call it distress, it is an area of opportunity that is ripe for development,” Norman said. “Basically what this will do, a business can invest within this parcel, this Opportunity Zone, and receive incentives for it.”
Investors can roll existing capital gains into Opportunity Funds with no up-front tax bill. A five year holding increases the rolled-over capital gains basis by 10%, a seven year holding increases the rolled-over capital gain investment basis five percent for a total of 15%. Investors can defer their original tax bill until Dec. 31, 2026 at the latest, or until they sell their Opportunity Fund investment, if earlier. Opportunity fund investment held in the fund for at least 10 years are not taxed for capital gains.
“As a business man, I’ve had few opportunities to make a profit, and not pay any capital gains tax,” Norman said.
County Administrator Wayne Adams thanked Norman for his support of economic development in the Fifth District.
“We’ve had economic development recovery since the recession of 2008, but not every area has profited by that recovery. Some areas get left behind. The way this initiative address that, says those who profited, we are going to give you an incentive to plow that money back into areas, where we can have growth and opportunity,” he said.
City Manager Matt DeWitt said this is an exciting time to be in Newberry.
“With these types of opportunity, we are most excited about the potential Newberry has for growth, and economic development. This opens the doors wider than they have been,” he said.
Keith Avery, president and CEO of the Newberry Electric Cooperative, said that entities in Newberry County that work to improve economic development have one common goal, to not only benefit the people of Newberry County, but those who come into the county as well.
“We share that vision, and work together for that vision,” he said.
Reach Andrew Wigger at 803-276-0625 ext. 1867 or on Twitter @ TheNBOnews.