PUERTO rICO GOV SIGNS OPPORTUNITY ZONE DEVELOPMENT ACT
Rosselló enacts bill alongside investors at Opportunity Zone Summit
SAN JUAN – Puerto Rico Gov. Ricardo Rosselló signed Tuesday Senate Bill 1147, which establishes the regulatory framework for the development of Opportunity Zones on the island under the U.S. Tax Cuts and Jobs Act of 2017.
The Opportunity Zones created under the federal law provide tax benefits to low-income communities to achieve their economic development, the Rosselló administration said in its announcing release. Ninety-seven percent of the island was designated an Opportunity Zone, it added.
The governor signed the law after delivering a presentation at the “Puerto Rico: A Paradise of Opportunities” summit at the Puerto Rico Convention Center in San Juan, which was attended by local, national and international investors.
“From now on, Puerto Rico will benefit from the Opportunity Zones Development Act. This statute makes us the best place in the Nation to invest, since it will promote [multimillion-dollar] investments and the creation of thousands of new jobs. But above all, this measure will have a significant impact on the recovery of Puerto Rico after the passage of Hurricane Maria,” the governor said, adding, “Today, we are not only advancing towards a fairer society, but we are also providing access to capital in different areas that will allow Puerto Rico to be even more competitive.”
Investment in Opportunity Zone funds allows for the deferral of taxes on capital gains on the sale of an asset before Jan. 1, 2027, if the amount invested is equal to the profit earned. The new measure proposes an incentive framework for a 15-year period.
Investors May Skip Puerto Rico Without ‘Opportunity Zone’ Guarantee
Could draw billions in investment to island
The increasing interest in the hurricane-ravaged island, virtually all of which is an opportunity zone, is putting pressure on the local government to pass a months-old opportunity zones tax bill that would give the island access to the same benefit as the break created in the U.S. tax overhaul. Much of the island needs rebuilding, making it particularly appealing to real estate investors.
But the bill’s passage remains uncertain months after it was introduced.
“I know of several investors on the line of deciding whether to invest in Puerto Rico or another zone pending the local legislation. But as time passes they are presented with opportunities in other areas and may have to elect those over Puerto Rico,” said Giovanni Mendez, a tax attorney at GEO Puerto Rico Services in San Juan. Mendez manages a $25 million opportunity fund and advises U.S. and Puerto Rico clients with opportunity funds ranging from $80 million to $250 million.
