Opportunity Zones

Opportunity Zones, introduced by the federal government in the 2017 Tax Cuts and Jobs Act, were designed to stimulate economic growth in distressed urban and rural communities across the United States by offering tax incentives to investors.

To capture these benefits, investors reinvest realized capital gains from other investments into Qualified Opportunity Funds (QOFs). These funds, structured as partnerships or corporations, are specifically created to invest in Opportunity Zone projects.

The key tax benefits include:

1. Tax Deferral: Investments placed into QOFs defer taxes on capital gains until the earlier of a) the sale of the QOF investment or b) December 31, 2026.

2. Tax Reduction: Investments held for at least 5 years qualify for a 10% reduction in the taxable amount of deferred capital gains, and those held for at least 7 years receive a total reduction of 15%.

3. Tax Exemption: Investments held for at least 10 years are exempt from taxes on any appreciation in the QOF investment at the time of sale.

With the 2026 deadline approaching, what do you think the future holds for Opportunity Zones & Qualified Opportunity Funds?

For more information on investing in Opportunity Zones, visit https://lnkd.in/g7kX3BZW

Disclaimer: Any tax-related information provided is understood to be for general informational purposes only and not to be taken as formal tax or legal advice.