Ohio Senate Bill 225 Paves the Way for Greater Investment in Opportunity Zones and Historic DistrictsClient Alert
Ohio Senate Bill 225 is poised to make dramatic enhancements to certain tax credit programs in Ohio, specifically those surrounding investments in “Opportunity Funds” and historic buildings. Signed into law by Governor Mike DeWine in June 2022, the Bill is positive news for real estate developers working to revitalize Ohio communities with investment and rehabilitation projects.
Tax Credits for Opportunity Zones
- Awarded tax credits cannot exceed $75 million for the fiscal biennium beginning July 1, 2021, ending June 30, 2023; $50 million for fiscal year 2024; or $25 million for each fiscal year thereafter.
- A critical element of the Bill is that the term “taxpayer” is differentiated from the term “person,” allowing non-taxpaying entities to take advantage of the program as well as Ohio residents and taxpayers who have different qualifications.
- The tax credit equals 10-percent of the amount of the person’s investment in the fund that the fund invested during the immediately preceding investment period in Ohio opportunity zones, with a $2 million cap for all applicants.
- The investment period is the six-month period from January 1 to June 13, or from July 1 to December 31.
- In 2021, there were $10 million in tax credits left over; therefore the increase in funding incentivizes investors to contribute to low-income communities and opportunity zones with a high probability of being awarded credits.
Tax Credits for the Restoration of Historic Buildings
- There is a $120 million limit on rehabilitation tax credits for 2023 and 2024, and $60 million of rehabilitation tax credits for each year thereafter. This allocation is doubled from the current $60 million cap.
- Total tax credits for any single project cannot exceed $10 million for any year.
- The certificate holder may claim a tax credit equal to 35-percent of the dollar amount indicated on the tax credit certificate if any county, township, or municipal corporation within which the project is located has a population of less than 300,000 according to the 2020 census, and 25-percent otherwise.
- For rehabilitations not exceeding 24 months, a rehabilitation tax credit certificate cannot be issued before the rehabilitation is complete. For rehabilitations not exceeding 60 months, a rehabilitation tax credit certificate cannot be issued before a stage of rehabilitation is complete.
- This program will be critical for continued investments by developers in low-income areas and will also serve in further expanding Ohioans’ pride through revitalization of Ohio’s most important landmarks.