OppZone Consulting

WHAT IS AN OPPORTUNITY ZONE?

Opportunity Zones are census tracts generally composed of economically distressed communities that qualify for the Opportunity Zone designation according to criteria outlined in 2017’s Tax Cuts and Jobs Act.

WHAT IS THE PURPOSE OF OPPORTUNITY ZONES?

The goal of Opportunity Zones is to encourage long-term investments, specifically in low-income urban and rural areas throughout the country, and to inevitably bolster the economy.

WHAT ARE THE BENEFITS OF INVESTING IN AN OPPORTUNITY ZONE?

Investing inside of Opportunity Zones comes with a number of benefits. Investors are given three different incentives to place their capital inside of an Opportunity Zone: a tax deferral, a step-up in basis, and a permanent tax exclusion if certain criteria are met.

DEFERRAL OF GAINS

Investors can defer tax on any prior gains invested in a Qualified Opportunity Fund (QOF) until the earlier of the date on which the investment in a QOF is sold or exchanged, or December 31, 2026.

PARTIAL EXCLUSION OF DEFERRED GAIN

If the QOF investment is held for longer than 5 years, there is a 10{ab00da231405656ab53e236adbc822260719de0342a41ff7a037e7d07eabcb24} exclusion of the deferred gain.  If held for more than 7 years, the 10{ab00da231405656ab53e236adbc822260719de0342a41ff7a037e7d07eabcb24} becomes 15{ab00da231405656ab53e236adbc822260719de0342a41ff7a037e7d07eabcb24}

EXCLUSION OF FUTURE GAINS

If an investor holds the investment in the QOF for at least ten years, the investor is eligible for an increase in basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged.

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