Opportunity Zones in Gilroy
The passage of the Tax Cuts and Jobs Act in 2017 by the Federal Government created a new program designed to spur economic development called "Opportunity Zones". Opportunity Zones are designated census tracts that encourage investment within those areas. Investments made by individuals in these zones through Qualified Opportunity Funds would be allowed to defer or eliminate federal taxes on capital gains in three ways:
- Temporary Deferral: A temporary deferral of inclusion for capital gains reinvested into a Qualified Opportunity Fund. The deferred gain must be recognized on the earlier of the date on which the opportunity zone investment is disposed of or December 31, 2026.
- Step-Up In Basis: A step-up in basis for capital gains reinvested in a Qualified Opportunity Fund. The basis is increased by 10% if the investment in the Qualified Opportunity Fund is held by the taxpayer for at least 5 years and by an additional 5% if held for at least 7 years, thereby excluding up to 15% of the original gain from taxation.
- Permanent Exclusion: A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in a Qualified Opportunity Fund if the investment is held for at least 10 years. This exclusion only applies to gains accrued after an investment in an opportunity fund.
Gilroy has two Census tracts that are designated as Opportunity Zones; Census tracts 5126.03 and 5126.04. The interactive map below details what areas encompass both of Gilroy's Opportunity Zone Census tracts. These tracts are also qualified census tracts in the New Market Tax Credit (NMTC) program.
Now has never been a better time to invest in Gilroy's economy. If you are interested in learning more, please contact our economic development staff at 408-846-0202.