Opportunity-Zone funds off to slow start, lagging behind heady expectations

Tax breaks aimed at distressed communities prove tougher sell than expected

By Ruth Simon and Peter Grant / The Wall Street Journal

Investors have been slow to embrace a new tax break meant to spur economic growth in distressed communities, leaving the amount of money raised for these programs well short of fund managers’ lofty expectations.

The program, part of the 2017 federal tax overhaul, allows investors to defer and reduce taxes if they reinvest capital gains in nearly 9,000 low-income communities designated by the federal government as opportunity zones. Funds qualify for the preferred tax treatment by making equity investments in companies or real-estate projects in these communities.

Some real-estate executives have said the program could be the biggest thing for the industry in decades. Treasury Secretary Steven Mnuchin predicted last fall that opportunity zones would attract more than $100 billion in private capital.

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