Opportunity Zone designated in southeast Hobbs
Economic development eyed
With investors offered an opportunity to defer capital gains taxes, an area of southeastern Hobbs could see new economic development, such as housing and retail outlets.
Steve Vierck, president of Economic Development Corporation of Lea County, announced recently one of New Mexico’s 63 approved Opportunity Zones is in southeastern Hobbs.
The concept of Opportunity Zones became law under the Tax Cuts and Jobs Act of 2017, allowing investors to defer, decrease and possibly eliminate capital gains taxes by investing in low-income areas of the country.
“Eligible projects include housing, retail, industrial projects, expansions and new businesses,” Vierck said in a news release.
The new Hobbs Opportunity Zone is basically rectangular and bounded by Turner Street on the west, Marland Boulevard on the north, Landfill Road on the east and Stanolind Road on the south.
In order to use capital gains in any Opportunity Zone, funds must be invested in a certified Opportunity Fund run by a corporation or partnership and certified by the U.S. Treasury Department.
Deborah Burns, CEO of Albuquerque-based investUS LLC, and Roswell-based Susie Russell of the New Mexico Economic Development Department visited the EDCLC Tuesday to explain advantages of Opportunity Zones and Opportunity Funds.
“The IRS is still writing the rules,” Burns said, but general aspects are in the act of Congress and she is encouraged the concept will work well for both the investors and the country’s low-income areas.
“It could be tremendously impactful for stimulating economic activity in low-income communities throughout the country,” Burns said.
To date, no Opportunity Fund has been certified in New Mexico, but several corporations are looking into starting one, Vierck said. Meanwhile, some fund pools have been started in another state, Burns acknowledged.
In every state across the country, Opportunity Zones have been designated for the next 10 years, with benefits to early investment.
Capital gains invested into Opportunity Zones are granted a temporary deferral of taxes and the longer the gains are invested, the less tax there is to pay, Burns explained.
If investors keep their Opportunity Fund investments for five years, they will owe only 90 percent of the taxes. If kept for seven years, only 85 percent will be owed. But if an investment is held for the full 10 years, investors will pay no capital gains taxes on their Opportunity Zone investment.
Exclusions to projects in Opportunity Zones are so-called “sin” businesses, including golf courses, country clubs, massage parlors, hot tub facilities, tanning facilities, racetracks or other facilities used for gambling or selling alcoholic beverages.
Burns noted one important aspect of the law is a time limit.
“From when you realize the capital gain,” she said, “you have 180 days to invest it in an Opportunity Fund or you will pay the full tax on it.”
Vierck offered his office number, 575-397-2039, for potential investors to call for more information.
Curtis Wynne may be contacted at firstname.lastname@example.org.
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