Understanding Opportunity Zones
Enacted as part of the tax reform package that was signed into law in December 2017, the Opportunity Zones program is a new tool that allows individuals and corporations to take capital gain incurred from the sale or exchange of property – appreciated stocks, buildings, family businesses, and more – and roll the gain into businesses or projects located within Opportunity Zones.
With that investment comes tax benefits:
Jane has stock she bought for $300 that has now appreciated to $1,300.
She wants to maximize her potential benefits under the Opportunity Zones program. She invests her $1,000 in gain in an “Opportunity Fund” for at least 10 years.
On the original $1,000 in gain, Jane would defer the $238 she would otherwise owe in tax until 2026 and ultimately only pay $202.30 in tax in 2026 – a savings of $35.70.
If Jane makes a great investment in an Opportunity Zone, and her $1,000 gets tripled to $3,000 over 10 years, she does not owe any tax at all on that $2,000 in appreciation.
That potential for total elimination of tax on the growth of an Opportunity Zone investment has the startup investment community abuzz with excitement.
And with $6.1 trillion in unrealized capital gains currently sitting idle in portfolios and balance sheets across the country, the potential capital supply for this program is unparalleled.
Interested in learning more about Opportunity Zones?
Frequently Asked Questions
DISCLAIMER: OPAL Investments is not a Registered Investment Advisor, Broker/Dealer, Financial Analyst, Financial Bank, Securities Broker or Financial Planner. Any information provided pursuant to this Agreement is for information purposes only, and may change depending on future IRS rules, regulations, rulings or interpretations. This is not legal or accounting advice and is not intended to form a lawyer-client relationship. None of the information provided pursuant to, or related to, document is intended as investment advice, as an offer or solicitation of an offer to buy or sell, or as a recommendation, endorsement, or sponsorship of any security, company, or fund. Consult a licensed attorney and a certified professional accountant with knowledge of the Opportunity Zones program before making any investment or structuring decisions, including the merits and risks involved.