Opportunity
Zones

Opportunity Zones

Introducing New Opportunity Zones

As part of the Tax Cuts and Jobs Act of 2017 (“TCJA”) the US Government established 8,700 Opportunity Zones throughout the United States. These areas allow everyday investors to benefit from significant tax advantages on land, buildings, and other assets. Private sector investors will benefit from these substantial tax savings, while Opportunity Zone residents, businesses, and others will benefit from the capital investments [Credit: eig.org]

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Group 6175

O-Zone v. Standard Investment Growth

Tax Deferral, Depreciation, & Long Term Permanent Exclusion

Rather than paying existing capital gain taxes, Opportunity Zone investors can defer their liabilities by investing the funds in a Qualified Opportunity Fund. The initial amount invested is then subject to a 10% step-up in cost basis at year 5, and a 15% step-up at year 7 (thereby reducing the original tax liability). Qualified Funds do not have to hold single investments for that entire period while still maintaining the benefit, so long as the capital gains are re-invested into other Opportunity Zone assets. At Year 10 there is a waiver for all follow-on capital gains growth. As a result, investors not only reduce their initial capital gain liabilities— they also capture any growth completely capital gains tax free.

[Credit: eig.org- assumes 23.8% long term capital gains tax rate and an annual appreciation of 7% for both O-Zone and Standard Investment]

Opportunity Zone Fund Tax Advantages

Deferral

Capital gain taxes owed can be deferred for up to 10 years

Cost Basis Step-Up

Reduce capital gain liabilities by up to 15% with a step-up in cost basis

Tax Free Growth

Qualified investments grow capital gains tax free

Group 6146@2x