As part of the state budget signed into law on June 30, 2021, additional funding for the Ohio Opportunity Zone Credit became available for the 2021-2022 biennium period. Similar to the prior two year period, a maximum of $50 million in credits will be awarded on a first-come, first-served basis.
What is the Ohio Opportunity Zone Tax Credit?
The taxpayer invests cash in the Ohio Qualified Opportunity Fund (“Ohio QOF”), which in turn must invest that money in a Qualified Opportunity Zone property in Ohio. Once the money is invested in the Qualified Opportunity Zone property (“QOZ Property”), the taxpayer is eligible for a non-refundable tax credit equal to 10% of the amount of its funds invested by the Ohio QOF in the QOZ Property. The taxpayer may invest in multiple Ohio QOFs and may receive tax credits totaling up to $2 million dollars during the 2021-2022 biennium period.
The Ohio Opportunity Zone Tax Credit is applied to the individual income tax, as outlined in the Ohio Revised Code Section 5747.02. The tax credit may be claimed for the Taxpayer’s qualifying taxable year or the next consecutive taxable year. For the 2020-2021 biennium, a total of $50 million in tax credit allocation in available.
Who is Eligible for the Ohio Opportunity Zone Tax Credit?
To qualify for the credit, a taxpayer must meet the following requirements:
- A taxpayer must be an individual, trust, estate or pass-through entity that elects to file a return on behalf of its investors. Note, a nonresident taxpayer could participate if they otherwise meet the requirements of a qualified investment.
- A taxpayer must make or have made an investment in an Ohio QO Fund.
- The Ohio QO Fund invests all or a part the taxpayer’s fund contribution in a QO Zone property in Ohio. Note, this program is separate from the federal program and a taxpayer need not invest capital gain dollars in the Ohio QO Fund to be eligible for a tax credit in Ohio.
- A taxpayer made an investment during the eligible period and is subsequently invested in QO Zone property situated in an Ohio Opportunity Zone by the Ohio QO Fund during the eligible period.
How to Apply
Taxpayers that have invested in an Ohio QOF must apply directly to the Ohio Development Services Agency (“Development”) for the tax credit. Applications can be submitted during the eligible peiod for investments made by an Ohio QOF in QOZ Property in Ohio. The application will be available through Development’s application portal and must be filed electronically. Development will review the applications in the order they are received, issuing the tax credit certificate allocation until all eligible applications are funded OR the $50 million in tax credits is fully utilized – whichever comes first.
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