Wealthy Shielded Billions With Trump Tax Break Before Virus

(Bloomberg) -- Just before the coronavirus roiled the economy, wealthy investors piled into funds that take advantage of a popular, two-year-old tax break meant to help poor communities.

More than $10 billion in total has flowed into “opportunity zone” funds, a survey released Thursday by tax adviser Novogradac shows. That's up from the $6.7 billion the group tallied in January. Nearly all of the money was raised before mid-March, when President Donald Trump declared a national emergency to combat the virus.

The haul could benefit low-income communities during major economic stress and help spur a post-pandemic recovery, Michael Novogradac, the tax adviser's managing partner, said in a statement.

Investors may be in for a major windfall, too, especially if they sold stocks or other assets at the peak and now get to redeploy the money into real estate or businesses at bargain prices. The program allows investors in projects in roughly 8,700 designated zones to defer or even avoid taxes on capital gains.

Read a QuickTake: Will opportunity zones help rich or poor?

Signed into law by Trump in late 2017 and heralded as a way to revitalize distressed areas, opportunity zones have since been criticized for helping wealthy individuals and corporations lower their tax bills by investing in projects with little or no benefit to the poor. Funds have targeted developments such as luxury apartments and hotels in places like New Orleans and downtown Portland, Oregon.

Part of the increase in investment could be due to Novogradac tracking more funds. The survey in January included just over 500, while the most recent list tracks about 620.