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Author: Mark Ainely | Partner GC Realty & Development & Co-Host Straight Up Chicago Investor Podcast
If you’ve ever looked at a development project in Chicago and thought, “How did this even get financed?” — this episode answers that question. Real estate investing is already tax-advantaged, but once you understand Opportunity Zones, New Markets Tax Credits, and how capital gains can be redeployed, the game changes entirely.
In this episode of the Straight Up Chicago Investor Podcast, we sit down with Darryl Jacobs, a tax credit attorney who has been structuring complex real estate deals across Chicago and the Midwest for decades. We break down Opportunity Zones 2.0, New Markets Tax Credits, historic credits, and how these programs can turn projects that barely pencil into deals that actually work — even in distressed or overlooked neighborhoods.
This isn’t theory. These are tools being used right now to fund hospitals, mixed-use buildings, industrial projects, and residential developments across Chicago.
Episode Summary
Opportunity Zones were designed to push capital into underinvested areas — but most investors never take the time to understand how they actually work. Darryl explains how investors can defer capital gains, eliminate future taxes, and attract outside capital by structuring deals correctly.
We also go deeper into New Markets Tax Credits, a program many Chicago investors overlook entirely. While Opportunity Zones reward appreciation over time, New Markets can inject millions of dollars into projects upfront — often functioning like a forgivable loan when structured properly.
Throughout the conversation, we tie everything back to real Chicago neighborhoods, real census tracts, and real projects — from Pullman to Fulton Market to industrial corridors most investors drive past without realizing the incentives available.
Questions We Answer in This Episode
Q: What is an Opportunity Zone, in plain English?
A: Opportunity Zones allow investors to reinvest capital gains into designated census tracts, defer taxes, and eliminate future gains if the investment is held long enough. It’s a way to encourage development while rewarding long-term investors.
Q: Do Opportunity Zones only apply to real estate?
A: No. Any capital gain qualifies — selling stock, a business, or other assets. That makes Opportunity Zones especially powerful for investors who don’t have access to 1031 exchanges.
Q: What changed with Opportunity Zones 2.0?
A: The program is now rolling instead of expiring. Investors receive a 10% basis step-up after five years, and gains after ten years remain tax-free. Census tracts are also updated more frequently to prevent abuse.
Q: Can I use Opportunity Zones if I already own a property?
A: Yes — in some cases. You can raise Opportunity Zone capital into an existing project if it’s structured correctly and located in a qualifying census tract.
Q: What is a New Markets Tax Credit?
A: New Markets Tax Credits provide up to 39% in tax credits for qualifying projects in low-income areas. When leveraged correctly, they can act like a forgivable loan covering a large portion of development costs.
Q: Are New Markets only for massive developments?
A: Not always. While larger projects benefit most, smaller deals can still access low-interest loans and favorable terms through Community Development Entities (CDEs).
Q: Can residential projects qualify for New Markets?
A: Pure residential rentals usually don’t — but mixed-use projects often do. Adding a commercial component can open the door to significant incentives.
Q: How do Opportunity Zones compare to 1031 exchanges?
A: Opportunity Zones can be more flexible for younger investors. Instead of deferring taxes indefinitely, investors can eliminate future gains entirely after ten years.
Q: How do I know if my property qualifies?
A: Use Opportunity Zone and New Markets mapping tools from accounting firms or Chicago’s data portal. Census tract eligibility is the first box to check.
Show Notes & Timestamps
00:00 – Why so many Chicago developments rely on tax credits
01:30 – Why Opportunity Zones apply beyond real estate
04:55 – What Opportunity Zones were designed to solve
08:25 – How capital gains deferral actually works
12:10 – Opportunity Zones vs. operating businesses
15:05 – Why Opportunity Zones 2.0 tightened census rules
18:00 – Raising capital into existing properties
21:00 – The substantial rehabilitation requirement
25:20 – Why Opportunity Zones changed the 1031 landscape
28:40 – Why New Markets Tax Credits exist
33:35 – How New Markets act like forgivable loans
39:10 – Mixed-use projects and residential limitations
43:20 – Chicago examples using New Markets Tax Credits
48:55 – Minimum deal sizes and lender participation
53:40 – Why banks aggressively fund tax credit deals
59:00 – Final advice for Chicago investors exploring incentives
Takeaways for Chicago Property Managers & Landlords
Opportunity Zones and New Markets Tax Credits can dramatically change deal feasibility.
Capital gains from stocks or businesses can fund real estate projects tax-efficiently.
Census tract location matters more than most investors realize.
Mixed-use projects unlock incentives residential deals alone cannot.
These programs attract outside capital faster than traditional syndications.
Chicago has deep infrastructure supporting tax-credit-driven development.
Ignoring these tools can mean leaving millions on the table.
Guest Information
Guest: Darryl Jacobs
Company: Taylor Johnson
Website: taylorjohnson.com
Because finding good tenants and property management shouldn’t feel like online dating.
Dear Investor,
If you are an investor in either the city or suburbs of Chicago, I would love to speak with you about how we can help you on your real estate journey. At GC Realty & Development LLC, we help hundreds of Chicagoland real estate owners and brokers each year manage their assets with both full service property management and tenant placement services.
We understand that every investor’s goals are unique, and we love learning about each client’s individual needs. If there is an opportunity to help you buy back your time by managing your rental property or finding quality tenants, please check us out.
Best Investing,
Founder, Partner, Podcast Co-Host, and Investor
