In late May, NPRreported thatthe Trump Administration was looking at an extension for TheOpportunity Zone program in the wake ofCOVID-19. 

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Currently, investors can deferand lower their capital gain taxes through 2026 if they invest inan Opportunity Zone.

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White House adviser Ja'Ron Smithtold NPR that the administration is looking "at ways thatwe can extend the legislation." He declined to discuss the detailson what an extension might entail.

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Even before the NPRreport came out, several professionals who worked with OpportunityZones were suggesting that an extension would benecessary in the wake of the pandemic. 

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Right now, investors get a 15%benefit if they hold the Opportunity Zone investment for sevenyears. "I think it would be helpful to extend that to give morepeople the opportunity to get the full seven-year benefit," saysReid Thomas, chief revenue officer and managing director at NESFinancial, a JTC Co. "We saw a big spike in investments at the endof December 2019."

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Others agree. "I think making theprogram either permanent or at least longer-term in its exposurewill be good," says Steve Polivy, chair of Akerman's EconomicDevelopment and Incentives Practice.

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Adam Stifel, executive vicepresident, development at Capital Square, wants to see the programextended to keep money flowing into it post-COVID. He is concernedthat the pandemic could hurt the program as it begins to gainsteam.

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That would buy the program timethat Stifel thinks it sorely needs to for investor education.Investors still need to get their heads around it, he says. "COVIDcame at an inopportune time in the world of OpportunityZones."

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In April, the Internal RevenueService extended one deadline. The agency pushed out the perioduntil July 15, 2020, for certain time-sensitive real estateinvestments.

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Some people would like to see anadditional extension. "Why not for capital gains purposes put themoney into a fund and see if you can find an investment in the next180 days," Polivy says. "The next 180 days from July 15th reallyputs us to December or January 2021. I'm not sure that you're goingto have a lot of investors who are going to be feeling good aboutinvesting in Opportunity Zones at that time."

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There are other changes thatshould be considered as well, some observers say. Since OpportunityZones are designed to create a social impact, Thomas thinks thereshould be reporting requirements around measuring the effects offunds. "For us, we would certainly be supportive of that. Itwouldn't hurt to have that imposed, but not mandatory."

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Despite the need for some fixes,Blake E. Christian, partner at Holthouse Carlin & Van TrigtLLP, sees the program as a win. "As the regulations came out, theprogram just got better and better," he says. "In my mind, itbecame more flexible. Nobody has told me they regret setting one upand that they're taking their money out. I have not had anybodytake their money out of one yet."

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Leslie Shaver

Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.