OPPORTUNITY ZONE FUNDS

HOW IT WORKS

Opportunity Zones were established by Congress in the 2017 Tax Cuts and Jobs Act as an innovative approach to spur long-term private sector investments in low-income communities nationwide. The Opportunity Zone investment tool allows private investors to receive tax benefits by reinvesting capital gains into a Qualified Opportunity Fund (QOF) that in turn makes qualified investments in real estate or businesses located in distressed communities nationwide. 

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Deferral of Gain

Temporarily defer invested capital gains until date QOF investment is sold or December 31, 2026, whichever is earlier.

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Step-Up in Basis

Original investment's tax basis increases by 10% after 5 years.

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Permanent Exclusion

After 10 years, permanently exclude capital gains on any appreciation of the QOF investment.

*Benefits vary depending on duration of investment. Per draft Treasury guidance and the guideline update in October 2018, investments in a QOF must be made by 12/31/21 to be eligible for the 10% step up in basis for holding 5 years.  Per draft Treasury guidance, a QOF investment made before the Qualified Opportunity Zone's designation expiration and held for 10 years or more years can qualify for permanent capital gains exclusion through 12/31/47.  This is not tax advice. You should consult with your tax advisor.