There’s plenty of enthusiasm for new U.S. tax breaks for investing in low-income communities designated as opportunity zones. But many people have delayed spending because of uncertainty about how the incentives will work. The Trump administration sought to clear away those hurdles Wednesday with new guidelines designed to meet investor wishes, while leaving unresolved some issues flagged by critics.
The intention to generate social or environmental benefit is key to impact investing. But a tax break can be an additional incentive. Among the many provisions of the Republican tax bill signed by President Trump last month is the new “Investing for Opportunities Act,” which lets investors temporarily defer taxes by investing their capital gains in distressed areas designated as “opportunity zones.”