The Virgin Islands Consortium reports on Governor Mapp’s recent nomination of 14 neighborhoods on St. Thomas and St. Croix as Qualified Opportunity Zones eligible for U.S. tax breaks under the massive tax bill passed by Congress last December. [Seems eerily problematic. Any thoughts?] Here are excerpts:
The nominated zones, which are considered 14 “low income census tracts”, are subject to the approval of the U.S. Department of the Treasury. As part of the Tax Cuts and Jobs Act of 2017, Congress created a new incentive to encourage investment in low-income communities by allowing investors who reinvest the proceeds of capital gains in qualifying property or businesses located in designated Opportunity Zones to defer and reduce their capital gains taxes.
Under the new tax law, U.S. investors who invest in qualified property in an Opportunity Zone may defer U.S. capital gains tax on the new investment for up to 7 years; reduce the amount of those capital gains by as much as 15%; and pay zero federal capital gains tax on any appreciation in value of that new investment.
“These new federal tax incentives will strengthen and complement the incentives available to companies and individuals under our Economic Development Commission (“EDC”) program,” the governor said. “I am hopeful that these new federal tax incentives can attract new investments in hotel development, retail businesses, and industry in our most underserved communities. They will also be a valuable incentive for businesses looking to rebuild after the hurricanes.”
By statute, Qualified Opportunity Zones are limited to designated “low-income communities” in States and Territories which meet certain criteria, according to Government House. The zones nominated Mr. Mapp include Christiansted and all of the western end of St. Croix, as well as most of the southern half of St. Thomas.
The territory’s leader also commended Senator Tim Scott (R-SC) for his leadership in developing the Opportunity Zone legislation and spearheading it through the Congressional process. The original proposal did not include the Virgin Islands or other U.S. Territories, according to Government House, which added that it was only after meeting with Mr. Mapp last summer, that Mr. Scott agreed to expand the scope of eligible zones to include low income communities in the territories. [. . .]
[Unrelated photo above: U.S. Virgin Islands National Park from https://www.cnn.com/travel/article/us-virgin-islands-national-park-reopens-trnd/index.html.]