Tax Credit Eligibility
To qualify for the program, the investment must be made with opportunity funds that include one hundred percent of assets invested in Ohio based opportunity zones. Since it may be unlikely that a multi-asset fund exists which is solely focused on Ohio, it’s expected that taxpayers will create investment funds focused exclusively on state zones.
Tax Credit Limits
There is a limit to the amount of benefit that a taxpayer can realize through the program. The total credit is limited to $1M per fiscal biennium (10% of a $10 million investment). There is also a cap of $50M on the total allocation of credits. Once the Ohio Development Services Agency has awarded $50M in tax credits for a two-year period, no additional credits are available until the next biennium. This means some taxpayers could miss the opportunity to claim the credit if the limit has been exceeded.
Application Process
Taxpayers must apply for the opportunity zone tax credit before they can reap the benefit. Applications need to be submitted between January 1 and February 1 in the year following the initial investment. As an example, if a qualifying investment was made before the end of 2019, taxpayers would need to apply in the following January to be eligible for consideration. The state may take up to 60 days to review the application and determine if it will be awarded. It’s important to note that credits are awarded on a first-come, first-serve basis, so it’s important to file as soon as possible. Other Ohio tax credits with a similar application process are often fully subscribed within days.
Other Details
The tax credit is transferable to another taxpayer, but may only be transferred one time. No additional transfer will be permitted. It’s also important to note the credit must be used within the initial five-year carryforward period.
