Investing in Qualified Opportunity Zones

Tax benefits and potential risks

Opportunity zones were established with the Tax Cuts and Jobs Act in late 2017 to attract investments and jump-start economic growth in urban, suburban and rural areas throughout the country.   

The government allows any participating investor to defer paying tax on capital gains from the sale of property in these areas if those gains are invested in a qualified opportunity fund. That fund, in turn, must invest 90 percent of its assets in businesses or property used in one of these designated low-income communities.

Depending on the holding period, eligible capital gains from investments in a qualified opportunity fund can avoid tax on up to 15 percent of the original gain and defer tax on the remaining original gain until the sale of the fund or the end of 2026.

Real estate investment firms, private equity firms, Silicon Valley start-ups and others have eagerly begun to raise capital for qualified opportunity funds. Many tax questions come into play as companies and individuals evaluate the benefits of investing in opportunity zones. To receive the maximum tax benefit, investors must understand their options and plan accordingly.

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Is a qualified opportunity zone right for you? Schedule an assessment with our team to learn more about opportunity zone structuring, modeling and consulting.

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