2020 Election: How will a Biden Administration Impact EB-5, Opportunity Zones, Impact Investing, 1031 Exchanges, and More?

At a glance:

  • An incoming Biden administration will likely heighten regulatory scrutiny in areas and programs such as EB-5, Opportunity Zones, 1031 exchanges, impact investing and private equity.
  • For instance, he has proposed eliminating 1031 exchanges and increasing taxes on capital gains; at the same time, he may provide more regulatory clarity around Opportunity Zones and ESG.
  • Whatever the case, these shifts underscore the need for specialty fund administration technology that can deliver first-rate transparency, reporting, impact measurement, and more.

Following a contentious election, the incoming Biden administration has foreshadowed sweeping changes – around climate change, fiscal policy, COVID-19 relief, and more. Just how far these initiatives go, of course, will be dependent on which party controls the Senate.

Investors and fund administrators nationwide, however, should also take note of president-elect Biden’s potential impact on a number of other areas and programs, like EB-5, Opportunity Zones, 1031 exchanges, impact investing and private equity. Though much remains to be seen, it’s safe to say that Biden will increase regulatory scrutiny in such areas, underscoring the need for fund administration technology that can deliver first-rate transparency and reporting.

Here’s what you should know:


  • Broadly speaking, commentators agree that Biden may be good news for EB-5, if only because his administration is perceived to be more immigration friendly – which may, in turn, increase demand for US citizenship. However, “demand” is not really the issue in EB-5, “supply” is. Without an increase in visa capacity, there will likely be little positive effect on the inflow of capital.
  • An increase in such supply is unlikely under a Democratic-controlled Senate, which in the near term will likely be more concerned with resolving DACA issues than increasing EB-5 investments. In theory, a Republican-controlled Senate might be more open to this idea; however Senator Grassley, who would become Chairman of the Judiciary again, is likely to remain committed to program integrity reforms before any increases in capacity would be possible. 

To learn more about our EB-5 Fund Administration Solution, download the EB5 Solution Sheet today!

Opportunity Zones

  • The Biden administration has suggested three areas for improvements: incentivizing OZ funds to partner with community organizations; having the Treasury Department review OZ regulations to ensure the tax incentives provide distinct economic, social, and environmental benefits; and creating a detailed public disclosure and reporting system for developers.
  • The majority of OZ stakeholders support these fixes in one form or another, and legislation that would improve impact reporting and measurement has long been on the docket: in 2019, a bipartisan effort called for increased reporting to help ensure the initiative delivers intended benefits to OZ communities.
  • The key, as Reid Thomas, Chief Revenue Officer of JTC Americas, says, is to not overburden funds or investors themselves in the process. “Anything that would add additional layers of complexity – and/or cost – onto already highly specialized regulations and deal structures could lower net returns in such a way that the initiative may not be as attractive to new capital,” he wrote in a recent Globe St. op-ed. “Designing the reporting requirements in order to provide only enough information to see if the OZ initiative is succeeding in helping distressed communities as intended might be enough.”
  • President-elect Biden has talked about increasing the capital gains tax. The uncertainty of this is already having a negative impact on OZ funding rates, because the tax rate at the time of fund liquidity could be higher than the current rate. We hope Biden will address this quickly.
  • Given the need and political will for infrastructure development, it would also be good to see some thought given to incentives that could drive public-private partnerships for such development by leveraging OZs. 

Read more about our Opportunity Fund Administration Solution, download the Opportunity Zones Solution Sheet today!

1031 exchanges

  • Biden has proposed eliminating 1031 exchanges for investors with annual incomes greater than $400,000, as part of his plan to finance $775 billion in government spending over the next 10 years on childcare, elderly care, and other programs.
  • Similar efforts have been made before, however, and have proven unsuccessful. As Daniel Wagner, SVP Government Relations of The Inland Real Estate Group, said on a recent JTC Americas webinar: “We must educate and explain why so many of their predecessors thought they could use the elimination of Section 1031 to pay for programs, but after being educated came to the realization that Section 1031 is too important of an economic engine particularly in terms of supporting jobs…This is not a question of politics or party. Rather, this is a question of sound, common-sense policy, and we need to speak up now for a vital part of our tax code that has been an anchor to our economy and a job creator for the last 100 years.”
  • Section 1031 has been especially important amid the pandemic. As Justin Amos, account executive and 1031 specialist at JTC Americas, observes, “While many cash real estate investors have been patient due to the effects of COVID-19, 1031 exchange buyers have actually driven most of the transaction volume. The 1031 exchange has helped create new opportunities and stabilize pricing.”

Get more about our 1031 Exchange Fund Solution and download the 1031 Exchange Solution Sheet today!

Impact Investing/ESG

  • As CNote’s Yuliya Taravasa notes in Barron’s, “It’s a safe bet that a Biden administration will accelerate ESG and impact investing through broad support of regulatory and administrative decisions that eliminate roadblocks and incentivize investments.”
  • For instance, Biden, via the SEC, might provide more clarity around what qualifies as ESG – creating clearer standards and more reliable disclosures from various funds. This may place added pressure on such funds’ reporting requirements – especially private equity players, only 29% of whom now make a full ESG policy publicly available.
  • Biden is also expected to strengthen community development financial institutions (CDFIs) – via increased funding – as well as the Community Reinvestment Act (CRA).
  • What’s more, a Biden administration could catalyze and accelerate more investment into green infrastructure research and development – which should allow impact investors to “see their investment dollars go further within their portfolios of green infrastructure-related companies.”

Read more about Impact Investing by visiting our Impact Fund resource center today!

Private Equity

  • Biden’s proposal for increasing the tax rate on capital gains on those earning more than $1m a year – from 20% to 39.6% – would hurt private equity investors, as would pledges to increase corporate tax rates.
  • Though Biden has no plans as of yet around the deductibility of interest on corporate debt, President Obama did propose reducing it, and some expect Biden to do the same. Yet as Axios reports, “this might be politically difficult to implement, given how much debt companies have added during the pandemic.”
  • Some have also argued that Biden may benefit private equity by 1) better-addressing COVID-19, which would be good for everyone; and 2) implementing a more orderly trade strategy. 

To learn more about our Private Equity Fund Administration, read and download our Outsourcing in Fund Administration White Paper!

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Fund Services in Ireland: Enhanced Capabilities, New Opportunities

A webinar hosted by JTC
Wednesday, March 29th, 2023
2:00 PM – 3:00 PM EDT

Register now to reserve your space!

JTC can provide a comprehensive range of fund services from Ireland designed to take U.S. firms from local to global. Could Ireland be your firm’s new bridge to Europe?

The free online event will cover the advantages of launching a fund in Ireland as well as JTC’s enhanced suite of services. The panel will be moderator by JTC’s Wouter Plantenga, ICS Head of Group Client Services, and feature representatives of JTC, Ballybunion Capital, and INDOS Financial, all of whom have extensive experience providing financial services solutions to Irish and global domiciled fund products and vehicles.

This is a perfect opportunity to learn about Fund Services in Ireland from the best minds in the industry, so reserve your spot today!

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