"It's our future, let's build it together"

Opportunity Zone

Waterville’s Opportunity Zone is within the highlighted census tract (yellow), which includes the City of Waterville’s downtown district.

Upcoming Events

Waterville Opportunity Zone Workshop

View the presentation here.

This free workshop provides interested developers and investors with the information necessary to succeed in Waterville’s OZ, including:

  • – A geospatial overview of land and property within the Waterville OZ
  • – OZ program overview and guidance from the IRS*
  • – Insight from Wipfli|Macpage CPAs (tax division)
  • – How to maximize tax incentives via an Opportunity Fund

*IRS attendance was affected by partial federal government shutdown.

Explanation of OZ Tax Incentives

There are three tax incentives associated with the OZ program:

  1. Temporary Deferral – If invested in a qualified OF, certain realized gains will not be included in gross (taxable) income until the earlier of the following dates: when the OF is disposed; or December 31, 2026.
  • Example: An investor rolls over $100 of capital gains into the OF. Taxation on that $100 is deferred until 2026.
  1. Step-up in Basis – The basis is increased by 10% if capital gains reinvested into an OF are held by the taxpayer for at least 5 years, and increased by an additional 5% if held for at least 7 years. Thus, up to 15% of the original gain is exempt from taxation.
  • Example: An investor rolls over $100 of capital gains into the OF. Taxation is deferred on the $100, and the investor pays taxes on only $90 if investment is held for 5<x<7 years, or on only $85 if investment is held 7<x<10 years. Investor also pays capital gains tax on appreciation of the original $100.
  1. Permanent Exclusion – If an investment in an OF is held for at least 10 years, the gains accrued in that investment (once sold or exchanged) are exempt from taxation.
  • Example: An investor rolls over $100 of capital gains into the OF. Taxation is deferred on the $100, and the investor pays taxes on only $85. Investor pays no taxes on appreciation.

On Dec. 31, 2026, the lesser of the following will be recognized:

  • The remaining deferred gain (accounting for step-up basis)
  • The fair-market value of the investment in the OF

An investor may defer gains invested into an OF during the 180-day period beginning on the date of sale of the asset to which the deferral pertains.


Comments are closed.