Benefits of an Opportunity Zone Investment

The Opportunity Zones program offers investors the following incentives for putting in their capital to work in low-income communities.


Benefits

  • Investors can roll existing capital gains into Opportunity Funds with no up-front taxes.

  • After a holding period of 5 years, investors receive a 10% exemption on owed capital gains.

  • After a holding period of 7 years, investors receive a 15% exemption on owed capital gains.

  • Investors can defer their original tax bill until:

    • December 31, 2026, or

    • Until they sell their Opportunity Fund Investment, if prior to the above date

  • If an investor keeps his/her funds invested in the fund for at least 10 years there will be no capital gain whatsoever on the appreciation of the investment.


What is an Opportunity Fund?

The Tax Cuts and Jobs Act of 2018 created incentives to invest in targeted communities called Opportunity Zones. An Opportunity Fund is a new investment vehicle created to take advantage of the new law.

What are Opportunity Zones?

Opportunity Zones are based on data from each census tract. State and Federal governments then review the tracts and data and choose which zones should be targeted for economic development.


How does investing in an Opportunity Fund work?

This works similarly to a 1031 exchange, but with different tax benefits. If an investor has triggered a capital gain from the sale of assets such as stocks or real estate are able to receive a tax benefit if they choose to roll the gain into an Opportunity Fund within 180 days of the sale.

3 advantages when rolling over capital gains to an Opportunity Fund

  1. DEFER - Investors can defer the payment of capital gains until December 31, 2026.

  2. REDUCE - Investors can reduce the owed tax on the initial capital gain rollover by up to 15% after 7 years invested in an Opportunity Zone Fund.

  3. PAY ZERO TAX - Investors have the opportunity to pay zerotax on any gaines earned from the Opportunity Fund