Opportunity Zones


Introduced as part of the Tax Cut and Jobs Act of 2017, Opportunity Zones encourage long‐term private sector investment in ‘distressed communities’ nationwide. Under the regulation investors have the ability to contribute capital gains into investments on a tax‐deferred and tax‐reduced basis. Any gains on the new investments will be completely untaxed, should they be held for at least 10 years.

The goal of the Opportunity Zone Program is to incentivize long-term investment in struggling areas of the country, a concept that is core to Somera’s ethos and investment strategy.  Through strategic adaptive-reuse and redevelopment of existing structures Somera has become an established change makers in these markets, many of these urban cores have also been identified as Opportunity Zones.

Somera has an entrepreneurial investment model that explores opportunities in markets with the potential for tremendous growth over the next decade. Through each investment Somera makes the key driver is looking at ways the project will ultimately transform the entire real estate ecosystem around the asset with the ultimate goal of revitalizing many less sought-after markets across America.


Key Highlights of the Opportunity Zone Program:


1. Temporary Deferral – By contributing a taxable capital gain, an investor can defer 100% of the taxes due on those capital gains until 12/31/2026, by allocating and holding unrealized gains in an Opportunity Fund.


2. Reduction – The original amount of capital gains on which an investor has to pay deferred taxes is reduced by 10% if the Opportunity Fund investment is held for 5 years and reduced by an  incremental 5% if held for 7 years. The sunset occurs on 12/31/2026, whereby taxes on the deferred gain are due. In order to maximize the tax benefit, investments into qualified funds must be made by December 31, 2019.


3. Tax‐Free Exemption – Any capital gains on investments made through the Opportunity Fund accrue tax‐free as long as the investor holds them for at least 10 years. If the Opportunity Fund buys a building with deferred capital gains monies and holds it for 10 years, there are ZERO taxes associated with the profits upon sale of that building. In order to achieve the full 15% capital gains tax exclusion, a tax payer must invest their deferred capital gain into a Qualified Opportunity Fund by December 31, 2019