What is an Opportunity Zone?
An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment.
Localities qualify as Opportunity Zone if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via the delegation of authority to the Internal Revenue Service.
Opportunity Zones are designed to spur economic development by providing tax benefits to investors.
HOW DOES IT WORK?
Any investor who has a capital gain is eligible to invest in an Opportunity Zone Fund or investment vehicle. By doing so, you will defer your capital gain and can decrease the taxable amount of one's capital gain by up to 15%.
Taxes will be due on the capital gain in the year 2026, but should you keep your investment for the full ten year period, any appreciation above and beyond your initial investment is not subject to taxes.
How soon do I need to make an investment into a qualified opportunity fund?
An investor must invest in a qualified Opportunity Fund or investment within an Opportunity Zone within 180 days of the recognition of the gain (sale date).
For those investments made in a partnership, the 180 day period begins at the end of the partnerships' fiscal year.