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Division of Small Business
Delaware Opportunity Zones
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How it Works



Find your next investment in Delaware.

 

Why invest in an opportunity zone?


 

Why would an investor consider investing in a Qualified Opportunity Zones? If they roll a capital gain within 180 days, they could potentially:

 

1

Defer
the payment of capital gains until Dec 31, 2026.

2

Reduce
the tax you owe by up to 15% after 7 years.

3

Eliminate
tax on gains earned from the Opportunity Fund if the investment is held for 10 years.

 

 

 

How does an opportunity zone work?


 

Potential Scenarios:

 

Single Investor

 

Create a new Qualified Opportunity Fund

 

Single Project within a single Qualified Opportunity Zone is Funded
or
Funds Multiple Projects in Multiple Qualified Opportunity Zones

Multiple Investors

 

Create a new Qualified Opportunity Zone Fund as an LLC or a Partnership that distributes stake in the LLC or Partnership based on investment

Single Project within a single Qualified Opportunity Zone is Funded
or

Funds Multiple Projects in Multiple Qualified Opportunity Zones

 

 

 

Other Incentive Programs

Other incentive programs that may be available for specific, eligible projects include:

 

Downtown Development Districts & Related Potential Incentives:

The Downtown Development Districts (DDD) program is designed to leverage state and local incentives to encourage private investment in Delaware’s towns and cities. Current DDDs are in Dover, Georgetown, Harrington, Laurel, Milford, Seaford, Smyrna and Wilmington.

Investments in real property in these designated downtown districts are eligible for a suite of state and local incentives, including the DDD Rebate program administered by the Delaware State Housing Authority. Almost all of the DDD areas are also designated Opportunity Zones.

Eligible investments include capital investments on rehabilitation, expansion or new construction for commercial, industrial, residential or mixed-use buildings within the district boundaries. Rebates are issued after the project is completed. Qualified applicants include property owners, tenants, for-profit developers, nonprofit organizations, businesses and homeowners.

Strong Neighborhoods Housing Fund:

The Strong Neighborhoods Housing Fund offers direct assistance to local governments and organizations to clean up and restore vacant and abandoned properties, attack blight, and restore neighborhoods hit hard by the foreclosure crisis. Delaware’s Strong Neighborhoods Housing Fund is available statewide, with priority for certain target areas. SNHF funding has been deployed in Wilmington, Dover, Seaford, Milford, Laurel, and Route 9 Corridor neighborhoods in New Castle County. SNHF funding prioritizes projects where housing redevelopment is part of a broader community revitalization plan.

Low-Income Housing Tax Credits:

The federal Low Income Housing Tax Credit program is the primary source of financing for the new construction and rehabilitation of affordable rental housing. The Delaware State Housing Authority (DSHA) awards these ten-year federal tax credits in Delaware through a competitive application process. The equity raised through the tax credit investment makes it possible for developers to attract the financing needed to create or restore affordable rental housing. LIHTC projects can include mixed uses and incomes.

Delaware’s Qualified Allocation Plan (QAP) describes the requirements and criteria for allocating these credits. Certain federally- and state-designated areas may receive extra points in the application. Projects applying for LIHTC credits can also access other financing through DSHA from the Housing Development Fund and federal HOME Investment Partnerships program.

More on the LIHTC in Delaware

Housing Development Fund:

The Housing Development Fund is Delaware’s state housing trust fund. Through the HDF, Delaware invests in safe, affordable housing to provide options for all Delawareans. The HDF provides financing to developers of affordable housing to low- to moderate-income Delawareans. The HDF offers loans for affordable rental housing, facilities and group homes for special populations, and grants for the development of affordable homes.

Brownfield Development Program:

Delaware’s Brownfield Development Program encourages the cleanup and redevelopment of vacant, abandoned or underutilized properties which may be contaminated. Financial assistance is available to eligible parties in the form of Brownfield Grants funded by HSCA and the Brownfield Revolving Loan Fund. Both help eligible borrowers pay for the cleanup of brownfields.

Local Incentive Programs:

Local Incentive Programs from towns, counties, and cities may also be available. Contact us today to find out more.

R&D Tax Credit:

Straightforward process, significant return

  • The criteria for the credit mirror the federal R&D tax credit, with no additional requirements. Any company that qualifies for the federal credit and conducts R&D in Delaware automatically qualifies for the Delaware tax credit.
  • Delaware’s credit is 50 percent of the corresponding federal credit. That means that if your company is eligible for a federal R&D tax credit of $100,000, you are eligible for a $50,000 tax credit in Delaware, provided that all your R&D activity is conducted here in the State. Moreover, the tax credit is refundable. So, if your company’s Delaware R&D tax credit exceeds your Delaware tax liability, you will get a refund from the State for the difference.

 

Exceptional opportunities for small businesses

  • As passed in 2017, if a business generates less than $20 million in annual gross receipts (indexed annually1), the new credit provides an exceptional opportunity to optimize R&D investment. The company receives 100 percent (rather than 50 percent) of the corresponding federal credit. Plus, under the new law, you can apply the tax credit to receive a refund even if you have no revenue.
  • In the past, companies not yet earning a profit did not typically apply for the federal R&D credit, because they had no federal tax obligation and the federal credit is not refundable. With the change to Delaware’s R&D tax credit policy, you have a reason to apply for the credit, because you can get money back from your R&D investment in the form of a state tax refund.

*Indexed threshold: For tax year 2019, it is $20,910,000. For 2018, it was $20,329,000

Angel Investor Tax Credit:

The AITC provides a refundable tax credit for qualified investors in innovative, Delaware-based small businesses – connecting talented, high-tech entrepreneurs with new sources of capital. Click here for more information on business eligibility and investor qualifications.

Learn More

Apply Now

HUBZone Program:

The federal government’s goal is to award at least three percent of all federal contracting dollars to HUBZone-certified small businesses each year. See the HUBZone map to see where those certified zones are located.

View More



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