7 Important Things Know About Investing Opportunity Zones

1. 7 Important Things Know About Investing Opportunity Zones SUMMARY: Learn more about investing in an opportunity funds real estate. Find out how you can enjoy the tax incentives. Opportunity zones were launched to boost jobs and encourage economic development in low-income communities. The program offered investors tax incentives if they held the investments for several years. If you’re interested in putting your money in qualified opportunity zones, here are ten things you need to know. 2021 Deadline You can still turn investments into opportunity zones until December 31, 2026. However, if you want a ten percent reduction of tax on your capital gains, you’ll need to hold your investment for about five years. The deadline for those investments is coming up. By the end of 2021, that marks the end of the investment period. New investors in 2022 won’t be eligible for that tax perk. Plenty of Options You have 8,700 opportunity zones that you can choose from. That’s a lot. That doesn’t mean you can be careless about your options, though. You’ll need help browsing through those properties and finding commercial or residential investment properties. Look for an investment opportunity group. Partner with them so you can determine which opportunity funds real estate properties are worth your money. Which ones will be valuable in the future? Key Benefits There are three key benefits that come from investing in opportunity zones. These include the following: •The capital gains from the payment of the tax can be reinvested in an Opportunity Zone that’s deferred by the end of 2026 or when the property is sold, whichever comes first. Text

2. •If the original investment is held by five years, the basis of the investment grows by 10 percent. •Tax for additional gains can be excluded if the investment is held for ten years. Key Terms to Understand •QOZ. Qualified Opportunity Zone refers to a low-income community. •QOF. Qualified Opportunity Fund is a partnership or corporation formed for investing equity into a Qualified Opportunity Zone property. •QOZP. Qualified Opportunity Zone Property is the business or real estate property. It can also be a partnership interest or corporate stock that does business in the QOZ. Zero Dollars in Capital Gains Tax The program offers long-term investors a massive bonus. When you invest and hold that investment for at least ten years, you won’t have to pay for any of the taxes on your capital gains on the investment property. That saves you a ton and, also means you get to take home a bigger slice of the pie. Anyone Can Invest That is, if you have a capital gain, then you can invest that in opportunity zones. If you have assets like stocks or bonds, precious metals, a business, or a piece of property, you can invest their capital gains in an Opportunity Zone. That way, you can defer the taxes on those capital gains. Turbocharged 1031 A typical 1031 exchange requires you to reinvest the sales proceeds. However, when it comes to opportunity zones, you only need to reinvest the capital gains from the investment sale. Put the gains in an opportunity zone fund, pick an opportunity zone, and you’ll get to enjoy preferential tax treatment.