Investors, bankers, investment funds, developers, construction entrepreneurs and heads of agencies of the Puerto Rican Government met yesterday in San Juan to discuss the benefits of the federal program Opportunity Zones for Puerto Rico.
The event was organized by the Puerto Rico Builders Association and the Puerto Rico Chamber of Commerce.
“In a few occasions has Puerto Rico had such an opportunity as in the one provided in the Opportunity Zones” said Jorge Aldarondo, SVP of Banco Popular Puerto Rico. On April 9, 2018 Puerto Rico was designated as an Opportunity Zone under U.S. Tax Cuts and Job Act of 2017. This designation seeks to encourage investment in low income urban and rural communities in exchange for fiscal benefits. Of the entire island of Puerto Rico, to date, approximately 97% has been identified as eligible for these benefits!
Fiscal Benefits granted to Opportunity Zones.
The Opportunity Zone legislation aims to foster the creation and expansion of businesses in communities through capital gain tax deferral and the potential of significant set-up in basis. U.S.Taxpayers may elect to defer paying taxes on capital gains from the sale or exchange of property, if such capital gains are invested in a Qualified Opportunity Fund, which invests at least 90% percent of its assets in a qualified opportunity zone real estate property or business that hold tangible property. Real Estate such as commercial real estate properties, multifamily residential, hospitality development, infrastructure investment, mixed-use development, renewable energy investment, small business development, workforce housing and many other.
What does this mean for Puerto Rico.
This new Qualified Opportunity Zone will spur investment throughout Puerto Rico by providing a tool for real estate owners, developers and professionals to utilize the vast capital gains in real estate equity markets in Puerto Rico economic development.
Puerto Rico officials said the government is working to pass its own version of the Opportunity Zones program for the island to allow local investors to enjoy the same fiscal benefits as US investors.
Chief of Staff Raúl Maldonado said he does not expect opposition from the island’s Financial Oversight and Management Board because the panel is supposed to provide economic development tools to Puerto Rico. “This will allow local investors to have the same benefits as outside ones.” He stressed that there are a number of investors already willing to invest more than $600 million into the island.