What is an Opportunity Zone?
In early 2018 the governors of each state selected the Opportunity Zones for their states from among the state’s economically disadvantaged census tracts. You can see all the Opportunity Zones in the United States
What is an Opportunity Fund?
An Opportunity Fund receives money from investors, and in turn invests the money in Opportunity Zone Projects. An Opportunity Fund might have one or many investors. And an Opportunity Fund might invest in one or many Projects.
Do I have to pay the original capital Gain Tax?
In part. The original taxes are deferred until December 31, 2026 (or the date of a sale, whichever is earlier). Investors will have to recognize a portion of the deferred gains that year. Investors may benefit from the step up in basis at years 5 (10%) and 7 (another 5%) if they reach either holding period before December 31, 2026.
Can I put new money besides capital gains?
New monies can be invested in an opportunity fund, however the investor would not enjoy the same tax benefits as realized capital gains. In the case of Zone Opportunity Fund, an investor can put new money in to Zone, and follow under IRS Section 1202 for a tax free gain after a 5 year initial holding period.
How long do I have to be in the Fund?
The program allows for a stepped-up basis depending on the holding period. A 5-year hold will grant the investment a 10% stepped up basis. A 7-year hold grants the investment an additional 5% of stepped up basis, totaling 15% on the original basis. Finally, after 10 years, investors permanently avoid any capital gains tax on any gains from the opportunity zone fund investment.