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Opportunity Zone Tax Benefits

Brandon Borsen, CPA

Opportunity Zones are an investment opportunity with significant tax benefits that were created through the 2017 Tax Cuts and Jobs Act. It was created to encourage long-term investments in low-income neighborhoods.

There are three main tax benefits for investors in opportunity zones:

  • Tax Deferral – If capital gains are reinvested into opportunity zones the tax deferral on the reinvested capital gains can be deferred until December 31, 2026 or until the asset is sold.

  • Step Up in Basis – Any investment in a opportunity fund will receive a 10% step up in bases after 5 years of investing in the fund. Therefore, the investment must be made by December 31, 2021.

  • Tax Free Investment – If you keep the investment in the opportunity fund for at least 10 years, the capital gains from the investment in the opportunity fund becomes excluded from taxable income.

If you think an opportunity zone may be an opportunity you are interested in please contact our office to let us help how it may benefit your tax situation.