Wealthy Investors Steer Billions Toward New Trump Tax Break

By Noah Buhayar
January 9, 2020, 12:01 AM EST Updated on January 9, 2020, 1:34 PM EST

The controversy keeps mounting over a new tax break for investing in poor U.S. communities. But investors keep piling in.

They just pumped $2.26 billion into funds that are planning to take advantage of “opportunity zone” tax incentives, a 51% jump from early December, according to a survey released Thursday from tax adviser Novogradac. To line up the full benefit, investors had to commit their capital by the end of last year. But the figure also rose because the survey’s sample included more funds and because respondents updated how much they raised.

“It’s been a pretty steady rise,” said Michael Novogradac, the tax adviser’s managing partner. But the size of the jump in the most recent survey “did surprise me,” he added.

Once heralded as a novel way to help distressed parts of the U.S., opportunity zones are now being slammed as a government boondoggle. The perks -- included in the federal tax overhaul that President Donald Trump signed in late 2017 -- are being used to juice potential investment returns in luxury developments from Florida to Oregon. Several reports have shown that politically connected investors influenced the selection of zones to benefit themselves.

While Congress weighs changes to the law to boost transparency and ensure the poor benefit, the Trump administration has been working to get more money flowing. Last month, the Treasury Department issued a final set of rules about what will qualify. Some investors had held off on committing to funds until the government provided more guidance.

https://www.bloomberg.com/news/articles/2020-01-09/wealthy-steer-billions-toward-trump-tax-break-in-december-frenzy?sref=n2cudAla