Federal Tax Incentives Available If You Invest In Indianapolis

If you’ve got the money, it may be time to invest in Indianapolis. A new federal initiative is providing tax incentives for investing capital gains in low income areas. More than 150 census tracts in Indianapolis are expected to be included in the new federal initiative.

According to the Indianapolis Business Journal:

The program, which was created under the Tax Cuts and Jobs Act of 2017, allowed governors to nominate up to 25 percent of all low-income census tracts in the state for the designation. In April, Gov. Eric Holcomb recommended 156 tracts to become opportunity zones—the maximum amount allowed for Indiana.

These “opportunity zones” must have a poverty rate of at least 20%, or a median family income no higher than 80% of the state median.

How Does It Work?

Before you rush to invest in Indianapolis, you may want to know how it all works first. The federal government has not  set all of the details yet. However, the basic structure is as follows:

Development groups will create opportunity funds. From there, the funds need a targeted area or interest. Each fund must invest at least 90% of its assets into the opportunity zones.

For the serious investors, capital gains can be directed towards the funds of their choice. By doing this, investors can defer paying taxes on capital gains as well as permanently exclude up to 15% of their gains if they stay invested in the fund for at least 10 years.

Many are calling this a “win-win” scenario. Communities in need will receive some much-needed funding while investors receive a tax incentive for good will.

Is Investing In Indianapolis A Win?

Investments all carry some risk with them.  However, for investors looking for a new opportunity, it appears as though they could do worse than to invest in Indianapolis.

The availability of investment opportunities is one factor to consider when deciding where to move. For everything else, there’s City vs City.

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