Would Qualified Opportunity Funds Suit Your Investing Strategy

1. Would Qualified Opportunity Funds Suit Your Investing Strategy? SUMMARY: Decide whether your investing strategy works with qualified opportunity zones. If it does, then start looking for ways to start an opportunity fund. Investments are essential to growing your wealth and diversifying your portfolio. After all, you don’t want to put all your eggs into one basket. However, that doesn’t mean you should pick up investment projects carelessly, though. You’ll need to think about your investment strategy and whether the investment you have your eye on is a good match for it. If you’re thinking about putting money in a qualified opportunity zone, here’s why it might be a sound decision for you. What Kind of Investor Are You? What kind of investor are you? Some investors prefer short-term projects. Some can wait and hold on to a property for years. If you’re a long-term investor, your investing style and strategy are ideal for qualified opportunity zones. That’s because for qualified opportunity zones, if you can hold on to the property for at least five years, you get tax incentives. If you can hold on to it for ten years, you’ll see massive costsavings. That’s why long-term investors are a much better fit for this project. How Do Those Tax Incentives Work? If you hold on to the investment for five years, you get a ten percent reduction on the taxes you’ll pay on your capital gains. However, if you hold on to the investment for at least ten years, you’ll get all the taxes deferred on those capital gains. That’s one of the major reasons investors pool together their resources to create an opportunity fund to invest in qualified opportunity zones. Are Qualified Opportunity Funds Right for You? Text

2. If you can hold on to the investment for years, it’s a good choice. But if you need your assets to be liquid in less than five years, it’s doubtful. If you aren’t confident that you can let the investment for at least five or ten years, you won’t see much in the way of the tax perks, which are one of the major advantages that the investment project offers. There are still other benefits to investing in qualified opportunity zones, though, like investing any of the capital gains in your portfolio. But if you’re after the tax incentives, you need to consider a long game strategy. How Do You Buy a Qualified Opportunity Zone? You start by forming a qualified opportunity fund. That’s the only way to invest in the project. The fund can be a partnership or corporation. The sole purpose of the fund is to invest in an opportunity zone. You can do this yourself or if you can pool your resources together with other investors, which minimizes your risk. You can also take part in several qualified opportunity funds, so that you can spread out your investment. That way, you’ll be involved in a lot of projects. What Properties Should You Pick? Before you invest in anything, make sure you pick the right property. Work together with an investment group to help you figure out which low-income communities will benefit you most. Which ones are aligned with your goals? Expert advice from an investment group will steer you in the right direction.