Opportunity Zone Investing

Opportunity Zone Investing Can Cut Your Tax Bill

This article by Robert W. Wood originally appeared on Forbes.com. You can access it here

Taxes are an expense we all have, not really an opportunity. Yet if you play your cards right, tax savings and opportunities can now go together in a big way. The big federal tax bill passed in the closing days of 2017 is loved or hated by some, but few provisions have sparked as much debate as the creation of Opportunity Zones.

The idea is to try to encourage people to invest in distressed areas called Qualified Opportunity Zones (QOZs), giving them big tax incentives for doing it. Investors get the tax benefits, so let’s look at the basics. How big are the tax benefits? Business or individual investors can elect to temporarily defer federal income taxes on capital gains if they timely invest their gain in a Qualified Opportunity Fund (QOF). You can defer the tax on your invested gain amounts until the date you sell your QOF investment, or December 31, 2026, whichever is earlier. 

And wait, there’s more. Investing in Opportunity Zones isn’t just tax deferral. How long you hold your QOF investment determines other tax benefits. If you hold the QOF investment for at least five years, the basis of your QOF investment increases by 10% of the deferred gain. So, when you sell your QOF investment later, you never have to pay tax on that portion. Hold it longer, the tax deal from the IRS gets even better.

Read more here.


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