Oconee County is located in the northwestern corner of South Carolina sharing western and northern borders with Georgia and North Carolina. While you may not be familiar with Oconee County, you may be familiar with Clemson University, located just across Lake Hartwell to the east, which is #27 out of 381 national universities in US News and World Reports' latest rankings and home to the 2018 NCAA National Football Champions. With its mountains and beautiful lakes, Oconee County is referred to as the state’s “Golden Corner” and has a number of advantages that present tremendous opportunities for growth and development including:
For more in-depth information regarding Oconee County please see the Information page on this site.
Opportunity Zones are census tracts spread across the nation that have been specially selected to receive unique tax advantages as part of the 2017 Tax Cuts and Jobs Act with the desire to attract investment and spur economic development. These zones were identified, with extensive input from local leaders and officials, as containing a unique blend of below average current economic conditions, but above average economic potential. Here are some of the basics regarding opportunity zones as they apply to investors, property owners, qualified opportunity funds, developers, and entrepreneurs.
Any investor who has a realized capital gain in any investment of virtually any type has the potential to defer and reduce their taxable liability on that gain by investing it into an opportunity zone. This can only be accomplished, however, by "rolling" that gain into a Qualified Opportunity Fund (QOF) within 180 days of the sale that generated the gain. The QOF must then invest the funds received into opportunity zone property or businesses. By investing the gain in the QOF the investor can avoid paying any capital gains tax due for up to 7 years. If the investor does not withdraw the funds for five years the tax amount due is reduced by 10%. If the investor does not withdraw the funds for another two years the tax amount due is reduced another 5%. At the end of year 7 the capital gains tax is now due. If the investor retains the investment in the fund for 10 years upon withdrawal the gain on the original investment is tax free.
Example: An investor purchased $100,000 of a publicly traded stock over a year ago and has recently sold that stock for $200,000. The capital gain subject to tax is therefore $100,000. Assuming a tax rate of 20% the tax due is $20,000. However, if the investor put $100,000 into a QOF there is no tax due at present and none would be due for another 7 years. At the end of 7 years the tax would be due, but it would only be $17,000 as a result of the 15% reduction. Note that it is strongly recommended that the investor pay the $17,000 tax with funds held outside the QOF. By doing so the original investment of $100,000 made into the QOF continues to grow. Now let’s assume that at the end of 10 years from the original investment into the QOF the $100,000 investment is now worth $200,000. At that point the investor could liquidate the investment in the QOF and the $100,000 gain would be tax free or the investor could leave the investment in the fund where it would continue to grow tax free.
This is a high level overview. Feel free to contact me if you have questions or need additional details.
Unlike investors, the opportunity zone legislation conveys no direct tax benefits to current property owners within the zones. However, clearly property owners stand to gain as capital flows into the area. Whether you own residential or commercial property or even raw land you may stand to benefit. The benefits, however, may not be limited solely to property within the zone. Property owners near by, particularly those just outside the zones, may also benefit indirectly as economic revitalization begins to positively impact the surrounding area. If you are an Oconee County property owner and have questions about how this new legislation may affect you please contact me so we can discuss your particular situation further.
If you are unfamiliar with Oconee County please review its advantages in the “Oconee County, SC" section above. If you are unfamiliar with the basics of opportunity zones please review the “Opportunity Zones” and "Investors" sections above. There is a host of resources on the internet today that provide you with more in-depth information regarding Oconee County and opportunity zones. I have provided links to some of these resources on the “Information” page of this site. Feel free to contact me anytime if you have questions and I will do my best to answer them for you or refer you to a source that I believe will have the answers. There is no charge for my service.